CalSTRS on Wednesday bought a 50 percent share of a string of Texas office buildings, spending $120 million.
The teachers' pension system teamed with Thomas Properties Group Inc. of Los Angeles to buy eight major buildings in the Austin area.
The seller was Lehman Brothers Holdings Inc. and an unidentified overseas government investment fund.
CalSTRS and Thomas already owned a combined 25 percent stake in the buildings.
Wednesday's deal was for $859 million, but much of the price was debt assumption. In terms of upfront investment, "we're in for about $120 million," said Ricardo Duran, spokesman for the California State Teachers' Retirement System.
California's public pension funds, stung by the real estate crash, have been turning away from speculative deals and focusing their money on stable properties. Thomas called the Austin office buildings "crown jewels."
It marked the second time this year CalSTRS bought a big chunk of real estate from Lehman Brothers, the defunct investment bank whose bankruptcy was a big factor in the stock market crash. In May, CalSTRS invested in a series of apartment complexes in a deal valued at $820 million.