Texas ERS commits $110m to two RE funds

The Texas Employees’ Retirement System re-upped with Oak Street and allocated $60 million to a separate account with Aviva.

The Texas Employees' Retirement System (ERS) wrote two checks to opportunistic real estate funds, according to its most recent transaction report.

In January, ERS committed $60 million to a separate account with the global asset management arm of UK insurer Aviva. ERS expects investments from the Aviva account to return between 14 percent and 16 percent, according to ERS' transactions report.


ERS also allocated $50 million to one of its emerging manager advisers, Oak Street Real Estate Capital. The pension system forecasts returns from the Chicago-based firm's opportunistic fund to be between 13 percent and 15 percent.


ERS' emerging manager program defines the group in real estate as firms with fewer than three years' experience and funds smaller than $500 million. The retirement system has allocated $176 million allocated to seven private real estate funds run by emerging managers as of June 30, including three other Oak Street vehicles, according to ERS' website.


The Texas pension system is targeting $200 million in commitments for the fiscal year 2016, which began September 1, all of which would be in non-core real estate strategies. The latest round of allocations bring ERS' total commitments to $195 million, according to the transaction report.


ERS will continue to focus on commingled club funds, niche property sectors, co-investments and a few global investments. Since the pension system began investing in private real estate, its total commitment is approximately $2.8 billion, according to the January transaction report.


ERS' $24.1 billion portfolio included $1.8 billion in private real estate as of January 31, according to the pension system's website.