NORTH AMERICA – The Teacher Retirement System of Texas is planning to take its single limited partnership investment structure strategy to Europe for this first time in the near future.
Eric Lang, managing director of real assets for the pension fund, wrote in an email that Texas Teachers recently approved its first single limited partnership fund in Europe.
Texas Teachers declined to disclose further details on the partnership, however, as the investment has been approved but not yet closed.
Texas Teachers typically commits around $100m-300m (€74m-222m) for most of its real estate investments.
The only exception to this rule is if the manager hired is considered an emerging manager.
The pension fund now has a preference to invest capital in more entities with a limited partnership fund structure, where Texas Teachers is the only investor.
Lang said: “We do prefer to invest in single LP funds, which allow us more influence on our investments, as well as help us to manage our portfolio structure."
Texas Teachers is now looking at Europe as a value-add investment play.
This follows in line with the pension fund’s overall real estate strategy, which is to be a value investor.
It looks in general terms to invest in real estate with managers it already has a relationship with, or ones that it has known for a long time.
“We need to be efficient when it comes to the number of its relationships we have,” said Lang.
When the pension fund looks at investing capital into Europe, it does not hedge on the issue of currency.
Texas Teachers places its real estate portfolio within its real asset category, which comprises 12% of the pension fund’s total investment portfolio.
The targeted allocation for real assets is 13%.
The pension fund is planning to conduct a new asset allocation study in 2014.
Part of the study will explore the possibility of changing the benchmark used for its real estate portfolio, the ODCE Index.