Texas Teachers adds to exposure with AEW Capital Management in Asia

The Teacher Retirement System of Texas has made its second investment in a fund targeting Asia managed by AEW Capital Management.

The US pension fund said the $50m (€45.2m) allocation will be co-invested alongside the AEW Value Investors Asia II fund.

Texas Teachers made a $100m commitment directly into the fund in April.

AEW is planning a $750m capital raise for Asia II.

Another major investor in the fund, with a $100m commitment, is the California State Teachers’ Retirement System.

The amount of leverage placed on the fund will be around 50%.

The gateway cities of Hong Kong, Singapore, Taipei, Seoul and Shanghai will be targeted, with capital mainly invested in existing assets that have a value-added play. 

The targeted property types are office, industrial and residential.

The new investment by Texas Teachers was part of $350m of new real estate commitments approved by the pension fund in October.

It is also backing Lone Star’s Fund X with a $300m allocation.

Limited partners in the fund are projected to achieve gross IRRs of 25%.

Fund X will provide Texas Teachers with some additional international real estate exposure.

The fund, which has a distressed debt investment strategy, will target investments undergoing restructuring or with impaired capital structures.

Planned equity investments will vary from $24m to $1.2bn, and the targeted number of investments could be as many as 30, with no single investment making up more than 20% of the fund.

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