UNITED STATES - Texas Employees Retirement System has selected RV Kuhns & Associates as its first ever real estate consultant.

Texas Employees issued a Request for Qualifications from qualified real estate consultants last summer and responses were presented by Callan Associates, Courtland Partners, Ennis Knupp & Associates, RV Kuhns and The Townsend Group.

In the end, however, the pension fund's board last month decided to give the contract to RV Kuhns as the fee would be $190,000 for the first two years, and then charged at a 3% increase or an amount equal to the Consumer Price Index, whichever is greater.

The pension fund had looked at several factors in making its final decision: fee proposal, soundness of approach and quality of work plan, vendor qualifications, staff qualifications and standards of conduct, ethics, potential and conflicts.

According to officials, the new appointment should give the institutional investor direction as it continues to build its real estate portfolio towards its allocation target, and while the US real estate markets continue to stabilise and recover.

Texas Employees established an 8% targeted allocation to real estate in August 2008 but has so far invested just 1.5% of the pension fund's $16.4bn in real estate, as it currently has a property portfolio valued at $253.6m (€178.3m).

All of this capital is currently held in a public REITs strategy, invested by domestically and on a global basis, though it is now anticipated that other investment strategies will be considered as the pension fund moves forward with its real estate investing.

The pension fund has established a long-term rate of return of 9.4% for its real estate portfolio.

RV Kuhns has previously researched several types of investments for pension fund clients, including Indiana State Teachers Retirement Fund and Montana State Board of Investments, such as core, non-core, urban, green, structured finance, infrastructure and timber.