California State Teachers’ Retirement System demurred when we asked for details on the search process that ultimately led to Julie Donegan’s appointment as its new real estate investment director in August. We then asked several market participants why they thought the executive was picked for the highly coveted role. Here are the reasons they gave.
1 She was already working at CalSTRS
Prior to being promoted to CalSTRS’ head of real estate, Donegan had been working at the second-largest US pension plan for four years and had been serving as interim real estate investment director since January, when her predecessor, Mike DiRe, was elevated to senior investment director for private markets.
Eliza Bailey, chief executive at Los Angeles-based Belay Investment Group – which oversees CalSTRS’ real estate emerging manager program and has a longstanding relationship with the investor – notes that under DiRe’s leadership the real estate team had developed a culture that she considers to be unique among investors.
“They are truly collaborative with their partners,” she explains. “It’s not an us-or-them mentality. It’s very, ‘Everybody wins by everybody benefiting.’ And they’re very commercial. They understand what needs to be done to execute, and they set up the organization so that they can be efficient in that execution. They’re very transparent in what their objectives are and what they’re trying to accomplish, and how that relates to you. A lot of times that’s not the case [with other investors].”
Commenting on Donegan’s appointment, Bailey notes: “I think it’s important that they hired somebody from within who understands that CalSTRS’ unique culture is a very positive culture within the industry, and [who] is able to continue to support and grow that culture.” By contrast, someone external might not have had that same understanding, she says.
2 She is well-versed in real estate
Bailey first began working with Donegan while the latter was a portfolio manager overseeing CalSTRS’ multifamily investments. Despite her sector focus, Donegan was adept at any conversation regarding Belay’s investments, which cover all property types and both equity and debt. “She’s always been very well-versed on commentary and considerations on both debt and equity, and all the different asset classes we do,” Bailey says. “We’ve never had a situation where there’s been any type of education curve on any of that.”
That broad knowledge base also extends to entity-level investments, including those in earlier-stage operating partners, which are Belay’s investment focus. “She knows the assets and understands the assets well. But she also understands because of her background what it takes for companies to grow and evolve and be successful,” says Bailey. “I don’t think all real estate people have that background and capability of not only understanding the underlying real estate, but also understanding real estate operators and investment platforms, and what their own entrepreneurial struggles might be and how to address them.”
Most real estate investment professionals either specialize in investing on the asset level or in platforms or operating companies, she adds. Donegan, however, “has experience in all of it, at every level. She is very good at looking at [an investment] from start to finish and all of the impact it is going to have at each stage.”
Others point to Donegan’s inquisitive nature in helping her to develop a wide-ranging industry acumen. “She’s proactive and likes reaching out just to understand what we’re thinking,” says David Schwartz, chief executive and chairman at Chicago-based multifamily specialist Waterton, which has been one of CalSTRS’ real estate managers for more than two decades.
Schwartz recalls an example of her proactive nature: “When I was chair of the National Multifamily Housing Council trade association, she would reach out and want to pick my brain on different things that were going on in our industry, from the regulatory environment to emergency renter’s assistance. So she’s got good natural curiosity about what’s going on in the marketplace in general.”
3 She is innovative
Schwartz calls Donegan “very entrepreneurial” and “someone who thinks outside the box.”
Gila Cohen, who is head of global institutional partnerships at Chicago-based private credit manager Monroe Capital and has known Donegan since her days at CalPERS, also holds the same view. “CalSTRS is one of the most sophisticated and innovative public pension plans in the market.
“They are willing to do things differently than other firms. And that type of sophistication and innovation and willingness to step out first, to do something that others aren’t, requires someone who’s innovative and smart, and someone who’s not afraid to step out into unknown territory.”
Cohen highlights a recent panel session on which she and Donegan both participated and discussed the future of the office sector. “I think she had some really thoughtful ways to look at where office is going and what it might become with a green and ESG lens to it,” she says. “And Julie had a very good perspective on what we could do over the next decade in order to bring real estate to the forefront of this drive for innovation. And I think she’s going to be a market leader in that sense.”
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