UNITED STATES- Teacher Retirement System of Texas is in the process of approving $800m ($568m euros) in new real estate commingled fund investments.
One of these was a $200m commitment to Carlyle Europe Real Estate Fund III. This is a commingled fund managed by The Carlyle Group.
Texas Teachers received input on its commitment from its real estate consultant, The Townsend Group.
Rob Kochis is a principal with the Townsend Group. He works on the Texas Teacher account. He said, "They have many people who are located in markets like Paris that have shown a strong capability to track down investments. This gives us a good feeling. I personally met with these people on a recent business trip."
The investment strategy for the fund for the most part is to acquire existing properties and improve them with stronger management or a renovation. It will focus on investing in office, industrial and retail properties.
Most of the deals will be in Western Europe in markets like Germany, France, Spain and Italy.
The commingled fund is marketed as an opportunity fund. Texas Teachers is figuring on achieving a 20% gross return.
The pension is also going to be making a $200m commitment to the Rockpoint Real Estate Fund III. This should be finalized in the next couple of weeks.
This is the first time that Texas Teachers has invested with The Rockpoint Group.
Real Estate Fund III is an opportunity fund with an investment strategy in the United States, Europe and Asia.
Kochis said, "We like that the Rockpoint Group looks at complex transactions that many other real estate managers don't. They have had some big successes in the residential property type. In Japan, they have invested in markets outside of Tokyo, which we think is a good strategy from a diversification standpoint."
Texas Teachers is considering two other $200m commitments. One was to the Capmark Commercial Realty Partners III. The other was to the CIM Real Estate Fund III.
The pension fund still has a long way to go before it reaches its targeted real estate allocation of 10%.
It has total commitments of $4bn and total investments of a little over $1bn.
The total amount that can be invested in real estate based on its allocation is in the range of $10bn to $11bn.
Texas Teachers and Townsend are now looking at some new investment strategies. One of the possibilities is global REITs.