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Texas Charts Out Real Estate Strategy

The $20 billion Texas Permanent School Fund has mapped out a proposal for implementing its new 6% allocation to real estate, which is up for approval this month.

The allocation proposal, which was drafted by the investment staff and the fund’s real estate advisor, Courtland Partners, may allocate 60% to value-added, 20% to core and 20% to opportunistic strategies, said Rick Agosto, board member. He said the fund will most likely start manager searches after the policy is approved.

Separately, the fund has narrowed down finalists in its general consultant search to NEPC, Ennis Knupp + Associates and R.V. Kuhns & Associates. The state issued the RFP in August after accusing its incumbent R.V. Kuhns of conflicts of interest in a real estate search that the fund conducted in April (MML, 8/11). The firm was allowed to re-bid. The board plans to make a decision later this month.

The board decided to postpone its search for a private equity fund of funds or specialty advisor because the finalist group was a mixture of both. The plan is going to determine whether the fund of funds or advisor structure would be better and select finalists within that category. Finalists included Partners Group, Neuberger Berman and Credit Suisse, which are funds of funds, Hamilton Lane, which offers advisory and funds of funds services, and Portfolio Advisors, which applied as a specialty advisor. 

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