It has emerged that the Teacher Retirement System (TRS) of Texas has committed between $36 million and $45 million to three emerging real estate fund managers on behalf of its Real Assets Emerging Manager Program.
The commitments, which were made in 2012 but have not been previously reported upon, have been made to Pennybacker Capital, an Austin-based opportunistic real estate investment firm; Savanna Real Estate Partners, a New York-based opportunistic real estate manager; and Trigate Capital, a Dallas-based debt specialist anchored by California State Teachers' Retirement System (CalSTRS).
TRS’s investment with the trio has come to light in an interview with Stuart Bernstein, the investment manager at TRS who runs the program. He told PERE that the TRS made commitments between $12 million and $15 million on behalf of the $850 million program, which was expanded in October 2010 to include a $500 million allotment to real estate firms.
They come in addition to commitments to funds managed by Admiral Capital, CityView and Hawkeye Partners that PERE previously reported on.
“The managers we committed to in 2012 have been able to successfully deploy capital but in some cases continue to face a challenging fundraising environment,” Bernstein told PERE.
Pennybacker II is an opportunistic fund targeting $150 million in equity commitments. Through the vehicle, Pennybacker is seeking multifamily, office and debt investment opportunities, mostly in Texas.
TriGate Property Partners II is a $300 million fund that will pursue direct investments in distressed debt and equity of existing properties in the southeastern US, with the goal of value creation through the recapitalization and repositioning of real estate assets. In its first quarter of its fiscal year 2013, CalSTRS committed $100 million to the fund.
Savanna — which PERE listed in its 2011 list of emerging managers to be on the lookout for — currently is raising funds for its follow-up vehicle to Savanna Real Estate Fund II, which closed on $550 million in spring 2011.
With the help of Credit Suisse Asset Management, which has discretion over $200 million of the total $500 million committed to the endeavor, the TRS Real Assets Emerging Manager Program aids US real estate firms looking to launch a first or second fund ranging between $100 million and $500 million. All told, approximately 10 real estate firms participated in the program in 2012.
The TRS will have its board report on February 23 to discuss plans for the program for 2013. “TRS continues to standby the emerging manager space and continues to work with other pensions and investors that want exposure to smaller managers,” said Bernstein. “TRS will continue to participate in the emerging manager space in 2013 and beyond.”
Separately, more than 400 people attended the day-long 2013 Texas Emerging Manager Conference on January 8, which the TRS co-hosted in Austin with the Employees Retirement System of Texas. Attendees included representatives from CalSTRS, the Teachers’ Retirement System of the State of Illinois, the California Public Employees' Retirement System, the NY Office of the Comptroller and the University of Texas Investment Management Company. Roughly half of the attendees participated in the second half of the day that was dedicated to real estate-only topics.