NORTH AMERICA – The Texas Municipal Retirement System has picked three new real estate managers and allocated them a total of $250m (€195m) of commitments.
The pension fund made a $100m investment into the INVESCO US Core Income fund and $75m each into the Abacus AbaCore I and Lubert-Adler Fund VII.
Texas Municipal worked on the search for these managers along with its real estate consultant, ORG Portfolio Management.
In a board meeting document, Holly Macki, director of real estate at Texas Municipal, cited the funds' "unique" investment strategies and ability to capitalise on unique investment opportunities.
The Core Income fund is an open-ended commingled fund managed by INVESCO Real Estate.
The initial equity raise is projected to be $300m, and the plans are to grow the fund to more $1bn over the next three years.
The targeted returns are to exceed the NFI-ODCE income returns for both gross and net by 250 basis points.
Texas Municipal is a seed investor, giving it a 20% discount in fees for the initial, reinvested and all follow-on commitments in the fund.
The size of commitment will allow the pension fund to achieve a $200,000 per year fee break compared with its typical core fees.
The fund is a blind pool with no existing assets at this time, and 90% of the return attribution will come from income.
It will target both primary and secondary markets, overweighting apartments and retail and underweighting more volatile sectors such as office buildings.
AbaCore I is a close-end core fund that only invests in apartments and is managed by Abacus Capital Group based in New York.
This is a commingled fund with a total equity raise of $300m-500m.
The targeted return for the fund is 7-9% net IRR.
The apartments will be acquired on a nationwide basis in the US, while leverage will not exceed 55%.
Lubert-Adler Fund VII is a value-add/opportunity fund.
The potential equity raise is $500m, with an $850m maximum.
The total net returns to the investor are an 18% IRR and a 1.75x net equity multiple.
The fund will invest in apartments, retail, hotel and industrial assets.
