The South Carolina Retirement System Investment Commission (RSIC) has selected two new real estate fund-of-one managers, TA Realty Associates and Greystar Real Estate Partners, to oversee new build-to-core mandates. RSIC has the potential to invest a total of up to $900 million to those managers over the next 10 years.
Both funds-of-one will be structured as joint venture partnerships, where RSIC will allocate more than 90 percent of the capital and hold key decision approval rights, including acquisitions and dispositions; suspension of capital for new investments; annual budgets and investment plans; termination of the venture; and purchasing the manager’s interest. TA Realty and Greystar, however, will have discretion within pre-determined parameters.
The pension plan has committed $300 million in equity to its fund-of-one with TA Realty and could pledge up to $300 million in additional capital during the initial 10-year term of the account. The partnership – focused on office, industrial, retail and multifamily real estate in the US – will acquire core, core-plus and value-added real estate, with up to 20 percent of the committed capital to be deployed through development. Investments will be retained upon stabilization as core assets. TA Realty will co-invest 1 percent, or approximately $3 million, to the joint venture
Meanwhile, South Carolina has designated $150 million to the Greystar account and could commit up to an additional $150 million over the initial 10-year term. The joint venture will develop six to eight Class A multifamily assets in the US. Target markets will include California, Florida and Texas, as well as Seattle, Portland, Denver, Phoenix, Chicago, Minneapolis, Boston, Washington DC, Atlanta, Charlotte and Raleigh, North Carolina. As with the TA Realty venture, investments will be retained upon stabilization as core assets. Greystar will co-invest 5 percent, or approximately $8 million, during the initial 10-year term.
The new funds-of-one are part of South Carolina’s five-year real estate investment plan, which also will encompass investments in REITs, open-ended core and core-plus commingled funds and closed-ended value-added and opportunity funds. The pension system is planning a major overhaul its property portfolio over the next five to seven years, significantly boosting its core real estate allocation from 6 percent to 50 percent, while cutting its opportunistic holdings from 57 percent to 25 percent.
TA Realty and Greystar both are existing real estate managers of RSIC. The pension system previously invested in TA Realty Associates X, which has generated a 12 percent net internal rate of return since inception. It also is a limited partner in Greystar Equity Partners VIII, which has returned 19.7 percent since inception.