Searches and Hires

Texas Permanent School Fund slates $150 million for real estate

Educational endowment also adds $175 internally managed commodities portfolio

Texas Permanent School Fund, Austin, received approval from the Texas State Board of Education for real estate commitments totaling $150 million during a board meeting Friday, confirmed Debbie Ratcliffe, a state board spokeswoman, in an email.

The SBOE oversees investment of the $33.6 billion educational endowment.

Allocations of $75 million each were made to AG Europe Realty Fund II, managed by Angelo, Gordon & Co., and Invesco (IVZ) Strategic Opportunities III, managed by Invesco Real Estate.

The school fund has a total of $225 million committed or invested in other Angelo Gordon real estate funds and $300 million in previous Invesco funds, John Grubenman, the educational endowment's director of private markets, told members of state board's Committee on School Finance/Permanent School Fund during a separate meeting Thursday, a webcast showed.

Mr. Grubenman informed finance committee members about a $30 million real estate co-investment in U.K. student housing assets made by the endowment's staff with support from the fund's real estate consultant, Courtland Partners, between meetings. Mr. Grubenman did not identify the manager of the co-investment.

The SBOE accepted the committee's recommendation to sign a new contract with StepStone Real Estate, which is acquiring Courtland Partners in a deal expected to close in March.

Steven C. Novick, the fund's lead real estate consultant and managing principal of Courtland Partners, told members of the finance committee that all of Courtland employees will move to StepStone and the team supporting the relationship with PSF will remain intact.

Separately, the board accepted the recommendation of the committee to allow the endowment's investment staff to internally manage $175 million in a passive commodities strategy.

The fund's consultant, Rhett Humphreys, a partner at NEPC, said during the committee webcast that the new internally managed portfolio will bring the fund's allocation to commodities close to the target weighting of 3% or about $1 billion.

Current commodity managers Pacific Investment Management Co. and Credit Suisse Asset Management, PSF's strategic partners in commodities, will provide advice and support to portfolio managers of the new internally managed portfolios. Each firm will continue to manage their commodity portfolios: PIMCO manages about $415 million and CSAM, $436 million, Ms. Ratcliffe said.

Funding for the new commodities portfolio will come from cash.

David Bradley, chairman of the finance committee, jokingly asked on the webcast whether PSF staff had submitted an RFP for the new commodity allocation.

Mr. Humphreys confirmed that NEPC did receive an RFP from the fund's staff, which was subject to the same level of due diligence external managers are subject to and was found to be acceptable on all points.