Texas Teachers sets aside $475m for real-asset portfolio

The Teacher Retirement System of Texas has approved $475m (€417m) in new real estate commitments.

The fund made a $150m allocation to the closed-end AEW Capital Management Senior Housing Investors III.

AEW will be investing in senior housing assets in the US and Canada, focusing on areas with strong demographics and high barriers to entry.

Housing Investors III will be buying age-restricted, independent/assisted living and memory care senior housing assets.

The main focus will be to invest in assets that produce stable cashflows.

Some deals will involve assets that can be repositioned or renovated, as well as new development opportunities.

Texas Teachers considers the commitment to be a follow-on investment, having made a $100m allocation into AEW Senior Housing Investors II in 2012.

AEW raised $371m for Fund II in 2014.

The pension fund has also approved a $250m commitment to Brookfield Asset Management’s Infrastructure Fund III-A.

Brookfield is seeking a $10bn capital raise for the fund, with a $12bn hard cap.

The manager will be co-investing $4bn.

Fund III’s target return is a net IRR of 10%, including a 5% cash yield.

The global fund, which has a core investment strategy, will buy transportation, renewable power, utilities and energy infrastructure.

Texas Teachers also made a $75m allocation to Stonepeak’s Infrastructure Fund II-T (Side Car) vehicle.

The pension fund had previously made a $250m commitment directly to the fund last year.

Fund II plans to invest in infrastructure assets in the US and Canada only, with a targeted 12% net IRR.

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