Texas Muni to commit $1.6bn over next three years

The Austin-based pension plan expects to commit up to $600 million in the coming year to core, value-added and opportunistic real estate investments.

The Texas Municipal Retirement System (TMRS) plans to commit up to $600 million to additional core, value-added and opportunistic real estate investments in 2014, according to documents from a December board of trustees meeting. The pacing plan introduced at that meeting also included TMRS’ projected real estate activity, including another $600 million in investments for 2015 and $400 million in investments for 2016, for a total allocation of $1.6 billion to the asset class over the next three years.
For investments this year, the $22 billion pension plan will consider existing and new managers as well as co-investment opportunities, provided the investments align with TMRS’ investment guidelines. The pacing plan did not include a breakdown by risk strategy for the $600 million to be committed in 2014, but the pension traditionally allocates slightly more to core than non-core.
In 2013, TMRS met its $500 million real estate allocation with commitments to seven funds. This total included $75 million to opportunistic real estate through a commitment to Lubert-Adler Partners’ Fund VII; $150 million to value-added strategies with commitments of $75 million each to Stockbridge Capital Partners’ Value Fund II and Greenfield Partners’ Greenfield Acquisition Partners VII; and $275 million to core with commitments to Harrison Street Real Estate Capital’s public real estate investment trust affiliate, Stockbridge’s Smart Markets, Abacus Capital Group’s AbaCore I and Invesco Real Estate’s Invesco US Core Income Fund. 
Currently, the pension plan’s real estate portfolio includes $1.3 billion in approved and committed real estate investments, including $150 million to opportunistic vehicles, $475 million to value-added and $675 million to core. TMRS has an overall target to real estate of 10 percent.