UNITED STATES - The Employees Retirement System of Texas has begun the search to find a real estate consultant for the first time, and has issued a Request for Information to the market.
Its decision to issue an RFP is designed to give the pension fund an idea as to how many qualified firms are out there, according to sources who said the pension fund is expected to select a consultant at its November board meeting.
According to pension fund officials, there is a need to bring in a real estate consultant following a change to its investment strategy, as the pension fund has a targeted allocation of 8% of its $23.1bn 1bn (€16bn) in assets to real estate.
Until now, Texas Employees has only had a domestic public REITs real estate strategy, worth 1.87% of its total plan assets, and this was managed internally by the pension fund.
However, Texas Employees now wants to add a private real estate strategy to the mix so assistance is needed to find out who would be the best managers to invest with and what investment strategies, from a risk perspective to, pursue.
Most pension funds usually invest in core open-ended commingled funds when starting a private real estate strategy, as this is understood to give them solid investment returns and good diversification from both a property type and geographical position.
Once this element of the portfolio is completed value-added or opportunistic strategies are then typically considered.