Texas Municipal Retirement System has chosen to drop Harrison Street Securities (HSS) as a REIT investment manager.
The subsidiary of Harrison Street Real Estate Capital manages a portfolio worth approximately $200m (€180m), according to the pension fund.
Texas Municipal cited underperformance and a change in the organisational structure of HSS.
According to the pension fund, HSS has underperformed since it was hired in 2012 with an initial allocation of $100m. It was awarded an additional $50m in 2013.
The performance was more than 500bps below the FTSE NAREIT Equity Index during the 12-month period ending March 2015. It also trailed the benchmark by 300bps since inception.
In April of this year, Harrison Street sold a 20% stake in HSS to a division of Nomura Securities. Texas Municipal said it was concerned that it could be a source of distraction for the manager.
Harrison Street Real Estate Capital still manages private real estate capital for Texas Municipal. The pension fund has invested $150m in the open-ended Harrison Street Core Property Fund.
The fund manager declined to comment.
The pension fund might make new investments in REITs in the future as part of its real assets allocation, which can include liquid investments, most likely through multi-strategy or passive accounts.