The New Mexico State Investment Council has approved the selection of The Townsend Group as its new real estate consultant.
The Council, which manages New Mexico's $15 billion endowment, has made the hire with an eye toward revamping the performance and investment strategy of its $583 million real estate portfolio. The four-year mandate is effective 1 September.
Cleveland-based Townsend, which advises more than 85 clients and represents real estate allocations in excess of $100 billion, “had the resources and team in place to improve the strategy” for the portfolio, which will focus more on core real estate going forward, said a spokesman for the endowment. Previously, the portfolio had been more geared toward opportunistic investments, but “that strategy has not met expectations,” he added.
In fact, performance of New Mexico’s real estate portfolio “has not been optimal,” the spokesman said. “Returns have been subpar, basically failing to meet benchmarks.”
Indeed, the portfolio underperformed the NCREIF Townsend Index during the first quarter by 0.7 percent, outperformed the index for the two-year and three-year periods and underperformed by 1.2 percent for the five-year period, according to the most recent quarterly investment report on the portfolio.
Townsend will provide non-discretionary real estate consulting services to New Mexico and will assist the council in developing its real estate program, as well as planning and designing an optimal and strategic allocation plan, according to a June 15 request for proposal, which received five responses. Among other duties, the consultant also will help screen, review and perform due diligence on funds and other vehicles that fit the investment profile of the real estate program.
Cleveland-based Courtland Partners, which has served as New Mexico’s real estate consultant since 2003, did not reapply for the consultant position, the spokesman noted.