Searches and Hires

Texas Permanent commits $362 million to 4 real estate strategies

Texas Permanent School Fund, Austin, received approval from the Texas State Board of Education for real estate commitments totaling $362 million during a board meeting Friday, a webcast showed.

The Board of Education oversees the $33.9 billion educational endowment.

Up to $100 million was committed to Madison Realty Capital Debt Fund IV for investment in senior middle-market loans primarily for properties in the tri-state area around New York City.

John Grubenman, the Permanent School Fund's director of private markets, reminded finance committee members during a Thursday meeting the TPSF had invested in the second fund in Madison Realty Capital's series.

Mr. Grubenman said the endowment fund was one of just six or seven institutional investors invited by PAG Enhanced Credit Management to invest in PAG Enhanced Credit Fund II, a real estate loan fund focused on opportunities in the Asia-Pacific region. The fund committed up to $100 million to the new fund.

TPSF committed $70 million in 2016 to the first fund in the manager's series and topped up the investment earlier this year with an additional commitment of $21 million.

Tristan Capital Partners was awarded a commitment of €75 million ($87 million) for its European Property Investors Special Opportunities Fund 5. The Permanent School Fund also invested in the third and fourth funds in the manager's pan-European series seeking middle-market investment opportunities in commercial, industrial and residential properties.

The fund made a first-time commitment of up to $75 million to TPG for investment in TPG Real Estate Partners III. The fund will acquire real estate operating platforms that are secured by real estate collateral in the U.S. and Europe.

Mr. Grubenman told finance committee members that TPG's real estate fund is likely to be oversubscribed and that TPSF might only be able to invest between $50 million and $60 million.

Separately, gross returns of the school-support fund beat the policy benchmark in all but the most recent quarter ended June 30.

The gross return for the three-month period was down 0.2% (benchmark, 0.1%); one year, 8.4% (7.9%); three years, 7% (6.4%); five years, 7.7% (7.2%); and 10 years, 6.6% (6.2%). Multiyear returns are annualized.

TPSF's 12-month gross return as of June 30, 2017, was 12.1% compared with 11.1% for the benchmark.

The strategic asset allocation as of June 30 was passively managed non-U.S. large-cap and emerging market equity, 14%; U.S. large-cap equity and private equity were each 13% of total fund assets; core bonds, 12%; hedge funds and real estate were each 10%; risk-parity and emerging market debt were each 7%; real return, 6%; U.S. small- to midcap equity, 5%; and quantitatively managed emerging market equity, 3%.