Searches and Hires

Texas Permanent School Fund assigns $225 million to real estate

The $32.8 billion Texas Permanent School Fund, Austin, committed a total of $225 million to three real estate funds.

Pennybacker IV, managed by Pennybacker Capital, received a $75 million commitment to invest in multifamily, office, retail and industrial properties in the U.S. Sunbelt with a focus on Texas cities, according to a webcast of the Thursday meeting of the Committee on School Finance/Permanent School Fund.

Up to $75 million was committed to Berkshire Multifamily Debt Fund II, managed by Berkshire Group, for investment in Federal Home Loan Mortgage Corp. multifamily subordinate debt securities.

Up to €75 million ($87 million) was committed to Ares European Real Estate Fund V, managed by Ares Management, for opportunistic real estate deals such as distressed ownership situations and recapitalizations in Europe with a focus on France, Germany and the U.K.

The commitments to Pennybacker Capital and Berkshire Group funds were the Permanent School Fund's first to the managers. PSF has been an investor in three earlier Ares funds, including the fourth fund in the firm's European real estate series.

The Texas State Board of Education, which oversees investment of the Permanent School Fund, approved the finance committee investment recommendations at a meeting Friday, confirmed Debbie Ratcliffe, a spokeswoman for the Texas Education Agency, which provides administrative support to the SBOE.

Separately, Carlos Veintemillas, deputy chief investment officer, told finance committee members that plans for a new internally managed commodities fund are nearing completion, according to the meeting webcast.

Internal portfolio managers have been selected and investment systems are in place, Mr. Veintemillas said.

Following a due diligence review by the fund's investment consultant, NEPC, the finance committee and the SBOE will be asked to approve the new portfolio at their next meetings Jan. 3-Feb. 2, 2018.

If the new portfolio gets the go-ahead, staff will manage $140 million with advice and assistance from Pacific Investment Management Co. and Credit Suisse Asset Management, PSF's strategic partners in commodities, Mr. Veintemillas said on the webcast. Each manager will continue to run about $1.2 billion in commodity strategies. Funding for the internal portfolio will come from cash.