Some real estate money managers are crying foul over consultants moving into their business.
And for some consultants, it's not just a side business.
Townsend Group, in response to an RFI from the Santa Barbara (Calif.) County Employees' Retirement Association, said that 60% of its revenue comes from discretionary mandates and 40% from non-discretionary consulting. The response, obtained by Pensions & Investments, was from a request for information from the $1.7 billion system for a $119 million fully discretionary separate account for a real estate manager of managers.
Finalists for the portfolio included two other real estate consultants: ORG Real Property and Courtland Partners Ltd.
The debate started heating up in October when Townsend revealed it was hired by Korea's $258 billion National Pension Service, Seoul, to manage $300 million in discretionary North American real estate. Townsend has similar mandates from two other Asian sovereign wealth funds, Kevin Lynch, principal of the Townsend Group, wrote in an e-mailed response to inquiries at the time of the announcement. He would not identify the funds.
Mr. Lynch was traveling and other Townsend executives were unavailable to comment further by deadline, according to an e-mail from Mr. Lynch.
Townsend Group is one of the largest real estate consulting firms. According to its website, Townsend advises 22 of the largest 36 U.S. public pension plans. Worldwide, Townsend advises 90 institutional clients and the firm advises on or invests more than $90 billion.
Townsend also manages two co-investment funds, with a combined $1 billion in discretionary capital: Cayuga Lake Fund and Seneca Lake Fund. In addition, Townsend manages two core-plus open-end real estate funds of funds, according to documents filed with the Securities and Exchange Commission.
The $70 billion State of Wisconsin Investment Board, Madison, is a recent investor in one of Town-send's open-end funds. Courtland Partners is the system's real estate consultant.
Cleveland-based ORG also manages two co-investment funds: the Lake Hempstead Fund and the Lake Success Fund.
The $132.8 billion New York State Common Retirement Fund is an investor in the Townsend and ORG co-investment funds. Town-send Group is also the Albany-based fund's real estate consultant.