Fund Expects To Invest $200 Million in Real Estate Investments Over Next Few Weeks
The $22.1 billion Employees Retirement System of Texas is setting up to increase its holdings in private real estate holdings.
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The fund's $1.1 billion real estate portfolio is comprised of publicly traded real estate securities (REITs/REOCs) and private real estate investments. The amount represents about 5% of total assets.
Investments in REITs make up $460 million of the total while private real estate is valued at $650 million. This mix will change as more money is committed to private real estate investments as the fund seeks to increase its overall investments in real estate to 8% of total assets in the next three years.
The combined real estate portfolio returned 8.2% for fiscal year 2012 through June 30, 2012. REITs returned 8.5% while the private real estate portfolio generated an internal rate of return of 9% net of fees, according to a report presented to the fund's Investment Advisory Committee and Board of Trustees this week.
The target for fiscal year 2012 (ending Sept. 30) real estate commitments is $450 million with an upper range of $600 million. Through June 30, 2012, commitments made for fiscal year 2012 stand at five deals totaling $385 million with a total of $283 million in capital called. It is expected that another two deals totaling $100 million in commitments will be made before fiscal year end.
The fund also is now at a point of needing another portfolio manager to ensure the real estate program can continue to expand its CRE investments and monitor existing funds.
ERS' three current largest private real estate investments are as follows each with commitments of $125 million.
* TCAM Core Property Fund;
* Prudential US Real Estate Debt Fund; and
* ProLogis Targeted U.S. Logistics Fund.
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