Texas TRS allocates $332m to RE

The pension system is backing two fund managers with which it had previously invested in its latest round of commitments.

The Teacher Retirement System of Texas earmarked $332 million to two real estate firms in its most recent round of commitments, according to a pension document released Thursday.

In June, Austin-based TRS wrote a $230 million check to Principal Real Estate Investors, the Des Moines, Iowa-based subsidiary of Principal Global Investors, for Strategic Real Estate Equity Fund II, an opportunistic, US-focused vehicle.

Principal could not be reached for comment, and a spokeswoman for TRS declined further comment.

The firm operates a variety of real estate vehicles across return profiles, including core and core-plus open-ended funds and a value-added commingled fund series focused on sustainable real estate. In 2015, TRS invested $250 million for Principal’s Green Property Fund II and a sidecar fund, after earmarking $200 million for the first vehicle in the Green Property Fund series in 2009, according to PERE data.

Principal’s most recent publicly-disclosed transaction was the June sale of Arbors at Mallard Creek, a 55,000 square foot retail center in Charlotte, North Carolina, for $25 million, according to data provider Real Capital Analytics.

Last month, TRS also earmarked €89.7 million to CBRE Europe Value Partners II, the latest European-focused vehicle from Los Angeles-based CBRE Global Investors. The firm closed the predecessor fund in February 2016 on €840 million raised from six investors, PERE previously reported.

CBRE GI finished investing Europe Value Partners I in May through the fund’s seventh acquisition, the H20 Rivas Shopping Centre in Madrid, for an undisclosed price. The firm bought the asset in partnership with Alpha Real Capital, the investment management arm of London-listed firm Alpha Real Trust and original owner of the asset. CBRE GI will own 70 percent of the asset, while Alpha Real will retain the remaining 30 percent and act as the operating partner.

Other previous TRS commitments to CBRE GI include $200 million to CBRE Strategic Partners US Value 8, a 2016-vintage fund focused on diversified US investments, and the same amount to CBRE Wood Partners Development 4, a 2015-vintage vehicle focused on multifamily, according to PERE data.

Last month, Britt Harris, the chief investment officer at Texas TRS for more than a decade, left the pension plan to join the University of Texas Investment Management Company, PERE previously reported. TRS deputy CIO Jerry Albright will serve as interim CIO. He is also chairman of the internal investment committee and sole director of TRICOT London, the first international office for TRS.

The pension system managed $18.6 billion in real assets as of June 30, 2016, according to its most recent financial report. For the fiscal year ending June 30, 2016, the asset class produced a net return of 11.7 percent, below its 12.6 percent benchmark.