Employees Retirement System (ERS) of Texas intends to deploy around $200m into industrial real estate funds in the current fiscal 2024 year to help address a current underweight allocation in its portfolio, according to the pension fund’s meeting document.
ERS of Texas has committed $50m to Alterra IOS Venture III, Alterra Property’s latest US and Canada industrial outdoor storage (IOS) fund. The commitment marks the pension fund’s first real estate commitment for its fiscal 2024 year which started in September.
Earlier this month, Alterra said it had raised $925m for its US and Canada IOS fund, exceeding its original $750m target and its $850m hard cap.
ERS of Texas said it is exploring potential investments in industrial real estate, including a $50m allocation to a US infill urban logistics fund and a $50m commitment to a Pan-Asia industrial fund. These investments would fall under the pension fund’s non-core investment strategy.
In addition, ERS of Texas said it is also evaluating a potential $50m commitment to a co-investment fund.
ERS of Texas said it is considering the capital commitments to industrial real estate to address an unintentional underweight in its portfolio. The pension fund believes industrial properties are currently outperforming other real estate sectors.
ERS of Texas also disclosed in the meeting document that over the past two years, it has adjusted its $741m public real estate portfolio. This involved reducing the allocation to the real estate investment trust (REIT) programme by $150m in 2023 as market conditions stabilised. However, the pension fund reinvested $25m of new capital into the REIT portfolio in January of this year.
The current geographic distribution of the public real estate portfolio leans towards US REITs at 62%, followed by 21% for Asia, Europe at 12% and other regions including Canada at 5%.
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