The New Jersey Division of Investment (NJDOI) has recruited a new head of real estate. Kevin Higgins, founder of real estate consulting firm Crossroads Advisors, joined the $76.78 billion pension plan earlier this month. It will be the first time that the $76.78 billion pension plan has had a dedicated investment officer overseeing the asset class in approximately four years.
“Real estate is an important part of our investment portfolio,” said NJDOI director Christopher McDonough, in an interview with PERE. “Kevin will be sourcing new opportunities, managing our existing portfolio, and figuring out the best way to grow the program.”
At this week’s meeting of the New Jersey State Investment Council (SIC), NJDOI proposed increasing its targeted asset allocation for equity-related real estate to six percent for fiscal year 2016, up from an allocation target of 4.25 percent for fiscal year 2015. The pension plan’s actual allocation to the asset class was 4.07 percent as of February 27. Additionally, NJDOI has allocated 0.52 percent of its total portfolio to debt-related real estate, with a proposed fiscal-year 2016 target of 0.82 percent. The SIC will vote on the proposed changes at its next meeting in May.
Prior to founding Crossroads, which provided real estate advisory services to institutional investors and managers, Higgins was at Swiss Re Asset Management for 10 years, serving in a number of roles that included head of Americas private real estate. In that position, he was charged with building investment portfolios, executing private equity investments in the Americas and managing and trading real estate fixed-income. Before Swiss Re, Higgins was part of the restructuring team at Mutual Benefit Life, where he worked on loan workouts and property turnaround, as well as direct investments and joint ventures.
“He has a wealth of experience – close to 30 years of investment and real estate experience,” said McDonough of Higgins. “He’s one of the most experienced people that we talked to.” At Swiss Re, Higgins was responsible for evaluating real estate funds – similar to what he will be doing at NJDOI, McDonough noted. Meanwhile, Higgins’ experience in real estate debt investing at Swiss Re and other firms would be useful in helping the pension to build its property portfolio on the debt side.
Higgins will be the most senior real estate-focused investment professional at NJDOI, and will work closely with Jason McDonald, who is senior portfolio manager for all of the pension plan’s alternative investments. Other professionals on the alternatives team who devote at least some of their time to property investments include analysts Michael Pascucci and Meghna Desai.
NJDOI has not had a head of real estate since Jamie Falstrault, the previous real estate chief, went on medical leave about four years ago. Since then, the state had adopted a team approach to investing in the asset class. “There hasn’t been one dedicated person, so it’s great for us that someone like Kevin will focus all of his efforts on the real estate portfolio,” said McDonough.
NJDOI launched a search last summer for up to three senior investment professionals for its alternative investments team, which is responsible for the pension plan’s private equity, real estate, real assets and hedge fund portfolios. The search began shortly after McDonough was appointed director of NJDOI last March, following the departure of Timothy Walsh, who left to become president of Gaw Capital Partners USA, the US affiliate of Hong Kong-based private equity real estate firm Gaw Capital Partners, in September 2013. Higgins is the first of the three new investment professionals to come on board. McDonough expects the senior officers for hedge funds and private equity to join NJDOI by May.
The pension plan’s most recent real estate investment was a commitment of up to $100 million to Denver-based private equity firm KSL Capital Partners’ KSL Capital Partners IV, which will be focused on equity and debt investments in real estate and related travel and leisure businesses. The commitment was approved at the SIC meeting this week.