State's Second Largest Pension Commits $250M Towards Real Estate Investment
Employees Retirement System of Texas, a public pension fund, is planning to commit up to $250M to real estate in its 2017 fiscal year. The Employee Retirement System benefits about 230,000 active and retired state employees and elected officials. Texas Employees has a total private real estate portfolio of about $2.9B, with core investments accounting for $775M, reports IPE Real Estate.
The pension fund's investment staff said non-core investments appeared to have better risk-adjusted return opportunities than core investments. It will consider MOBs, agriculture and core properties, although the main focus will be on value-add or opportunistic strategies. As of March, the fund's real estate portfolio has produced a net IRR of 12.75% since inception.
Like many pensions, Employees Retirement System of Texas is underwater. Last year it was reported that the fund fell short $7.2B. Lawmakers have failed to fully fund the system in 19 of the past 20 years. [IPE]