News release from STRS on sale of Key Tower: STRS Ohio Profits $80.8 Million on Its Key Center Investment

Dec. 22, 2005

State Teachers Retirement System of Ohio (STRS Ohio) has sold its 50% interest in Cleveland's Key Center for a total profit over the life of the investment of $80.8 million. STRS Ohio has owned a 50% share in the 57-story Key Tower and adjacent properties (982-space parking garage and 400-room Marriott Hotel) since December 1996. STRS Ohio's partnership arrangement with the building's other owner, the Richard E. Jacobs Group, called for the pension system to receive its original capital investment of $71 million plus a preferred annual rate of return of 11.5%.

Over the nine-year period that STRS Ohio was invested in the properties prior to today's sale, it received $3.2 million of its original capital investment plus net income of $59.1 million. With the sale of the Key Center investment to Wells Real Estate Investment Trust Inc. on Dec. 22, 2005, for approximately $312 million, STRS Ohio now receives $67.8 million, which is the balance of its capital investment, plus an additional $21.7 million to reach the preferred return. STRS Ohio's actual rate of return was 12.0% during the life of the partnership. With this sale, STRS Ohio is completely divested from the investment.

Approximately 8% of STRS Ohio's $59 billion investment portfolio resides in real estate. About 80% of the system's real estate holdings are managed internally. STRS Ohio's sale of the Key Center investment will help reduce the system's overweight allocation in office holdings.