The $14.9 billion Teachers’ Retirement System of Louisiana (TRSL) has approved a $50 million commitment to The Blackstone Group’s latest Europe-focused fund, Blackstone Real Estate Partners (BREP) Europe IV.
Advised by Hamilton Lane, the board of the Baton Rouge-based pension system began meeting with Blackstone in April to discuss the possible commitment. On October 7, Hamilton Lane presented the investment opportunity to board members, who subsequently voted to approve the commitment, according to TRSL’s director of private markets Maurice Coleman.
In the presentation on Europe IV, Hamilton Lane pointed to the fund’s “deep and experienced European team, supported by the broader Blackstone platform,” as a primary reason for making the commitment. It also cited Blackstone’s “ability to capitalize on a changing opportunity set through a diversified investment approach” and the vehicle’s “stable returns with low write-down ratio.”
Coleman told PERE that TRSL was interested in Blackstone in particular because of the firm’s knowledge and reputation for success. “The commitment gives us the opportunity to gain exposure to the European market through a well-known manager,” he said.
This commitment is not the first that TRSL has made to Blackstone. In 2010, the pension system committed $50 million to the Blackstone Real Estate Special Situation Fund II, and it previously committed to the firm’s global opportunity funds, BREP V and VI.
Europe IV, which is targeting €5 billion in commitments, held a first close on €2 billion last month. Board documents specifically state that TRSL’s commitment to the vehicle cannot exceed 10 percent of the fund’s total target due to a provision in the pension plan’s investment policy. However, due to the massive size of Europe IV, it is unlikely TRSL’s commitment will represent that percentage.
The investment aligns with a plan released by TRSL in August 2012 to allocate $275 million to real estate annually over the next five fiscal years. The pension, which currently has 8 percent of its assets invested in real estate, has a target allocation of 7 percent, divided between 4 percent to core strategies and 3 percent to opportunistic strategies.