The California State Teachers’ Retirement System has dropped the Townsend Group after nine years with the real estate consultant, the pension system said Friday.
CalSTRS is replacing the Cleveland, Ohio-based consultancy with Washington, DC-based RCLCO for a three-year contract that starts in March with a possible two-year extension. Townsend’s contract expires in February.
The pension system managed $26 billion in real estate out of its total $215.3 billion portfolio as of June 30.
CalSTRS started the search for a real estate consultant in June with a request for proposals and narrowed down the finalists to Townsend, RCLCO and Portland, Oregon-based Pension Consulting Alliance, which is the real estate consultant for the California Public Employees’ Retirement System.
“During the interview process, RCLCO impressed upon us that they add perspectives from operators in the industry, which will incorporate fresh insights to future strategic and policy discussions,” Harry Keiley, CalSTRS’ investment committee chair, said in Friday’s statement.
A spokesman for RCLCO, which was founded in 1967, declined to comment.
PERE understands the firm created an institutional advisory business about seven years ago to add to its economic and management consulting businesses. RCLCO’s current advisory clients include the Arizona State Retirement System. The firm also does independent fiduciary work, such as preparing third-party reports for new investments, for pension systems including CalPERS and the Massachusetts Pension Reserves Investment Management Board.
For its latest client, RCLCO is tasked with monitoring and commenting on CalSTRS’ real estate portfolio performance and policy, though the consultancy cannot recommend any individual investment opportunity.
CalSTRS’ real estate portfolio returned 8.1 percent in the year ending June 30, beating its 7.4 percent benchmark.
The pension system is the latest – and the largest – investor to switch consultants. In June, the Illinois State Board of Investment ended its consulting relationship with Cleveland-based Courtland Partners, its consultant for four years, PERE previously reported. ISBI hired Rock Creek Global Advisors and Hamilton Lane as strategic advisors in June.
Courtland lost another public pension plan in May when the Hawaii Employees’ Retirement System switched to Aon Hewitt after nine years with Courtland. Earlier this year, the spin-out of Portland-based RVK’s real estate team into a new Chicago-based firm called Alignium caused at least four public pension plans, all former RVK clients, to issue RFPs.