Texas Permanent School Fund is hiring Metropolitan Real Estate to invest $100m (€89.5m) in real estate ’secondaries’ and co-investments.
The investor approved the new separate account following a recommendation by its real estate consultant Courtland Partners.
Metropolitan, owned by The Carlyle Group since 2013, will buy interests in properties and real estate funds from investors looking to exit investments, according to board meeting document.
The mandate has been structured to give Texas Permanent full control over investment decisions and has an investment period of two years.
Courtland Partners has argued that Metropolitan has a proven track record of investing in real estate funds on the secondary market. The internal rate of returns of its latest fund has been more than 34% with an equity multiple of 1.2x.
Metropolitan raised more than $450m for its latest fund earlier this year.
Texas Permanent has also approved a $75m commitment to Longpoint Real Estate Partners Fund I, the debut fund of a company founded by four former principals of TA Associates, Dwight Angelini, Nilesh Bubna, Reid Parker and Robert Provost III
Longpoint Realty Partners, which already manages a $100m separate account for an institutional investor, is seeking $375m for the fund. The company will co-invest 1% of total capital raised up to a maximum of $3.75m.
Texas Permanent will be one of the initial investors to place capital into the fund. Courtland stated in a board meeting that there is another unnamed institutional investor that will be make a similar sized commitment to the fund.
The fund will focus on so-called ‘last mile’ logistics assets in markets including Boston, Miami, New York, New Jersey, Dallas and Washington DC.
The fund is pursuing a low-risk strategy, targeting assets that generate immediate cash flows and avoiding development.
Longpoint will look for deals where it can deploy $10m of equity with a view to owning 10 to 15 assets in total.
