The Teacher Retirement System of Texas (TRS) earmarked $220 million to two of its existing real estate managers in July, according to a new commitment document that the pension plan released Monday.
TRS earmarked a total of $200 million to Square Mile Capital Management, splitting the capital equally between the New York-based firm’s fifth fund and accompanying sidecar vehicle. The firm declined to comment, but PERE understands that it will begin to market Square Mile Partners V in the early fall. TRS is the lead investor in the fund, which has a $750 million target excluding co-investments, no hard cap and a gross return target ranging from 15 percent to 20 percent, according to sources familiar with the fund. Square Mile launched Square Mile Partners IV at the end of 2012 and closed the fund at the end of 2013 on about $800 million, including co-investments. TRS committed $100 million to that vehicle, according to PERE research.
Similar to the previous funds in the series, Square Mile’s latest opportunistic vehicle will have a focus on distressed debt backed by all real estate property types across the US. However, the firm also plans to target preferred equity, recapitalizations and special situations, sources said. The firm is understood to be seeking commitments largely from public pensions, sovereign wealth funds and other institutional investors. The firm currently manages about $3 billion in assets overall. Square Mile declined to comment.
In its other real estate commitment in July, the pension system allocated $20 million to Admiral Capital Group’s second real estate fund. The New York-based firm launched the value-added vehicle, Admiral Capital Real Estate Fund II, in October 2015 with a $175 million target, according to Bloomberg. Admiral held a first close for the fund on $48 million in October, according to a filing with the US Securities and Exchange Commission. The firm’s previous vehicle, which was launched in 2007 and was closed in 2011 on $115 million, invests across property types with a target transaction size of $25 million to $100 million, according to Admiral’s website. TRS allocated $15 million to Admiral Capital Real Estate Fund I, according to PERE research.
Admiral’s most recently publicly disclosed acquisition was the May purchase of Howell Bridge, a 256-unit apartment complex in Duluth, Georgia (pictured), with local operator McCann Realty Partners for $24.9 million, according to real estate data provider Real Capital Analytics. The duo bought the property, located at 3350 Peachtree Industrial Boulevard, from asset management company Resource America.
In TRS’ previous round of commitments, the pension system wrote checks totaling $500 million to three of its existing real estate managers in June, PERE reported. TRS committed $200 million to Almanac Realty Investors’ CMTG Investor vehicle, a sidecar investment vehicle into one of the New York-based private equity real estate firm’s portfolio companies, Claros Mortgage Trust. TRS’ board of directors also preapproved up to $100 million in co-investments through Westbrook Partners’ F55 Opportunity Longhorn Fund, a vehicle through which the pension plan can potentially invest in deals alongside Westbrook’s most recent opportunistic fund, Westbrook Real Estate Fund X. Additionally, the pension plan designated $200 million to Oaktree Capital Management’s latest opportunistic fund, Oaktree Real Estate Opportunities Fund (ROF) VII.
TRS managed $128.5 billion in total assets as of August 31, according to its website. The pension system has committed $2.5 billion to real assets to date in 2016.