PAG Opportunistic Funds Get $20M Boost From Texas Teachers 

PAG has secured $20 million in capital commitments from the Teacher Retirement System of Texas for the Hong Kong private equity shop’s two newly created opportunistic real estate funds.

TRS is investing $10 million each in PAG’s Kona Co-Invest and Mirai Co-Invest, according to a transaction report issued by the pension fund manager, which oversees more than $200 billion on behalf of public education workers in the second-biggest US state. The organisation, commonly called Texas Teachers, also committed $300 million to Blackstone Real Estate Partners X, the fund management giant’s global opportunistic strategy.

The two Cayman Islands-incorporated funds were launched only last month, with further details on the strategies not yet available, as PAG continues to tap TRS and other Texas state institutions as limited partners in the Asia-focused investment manager’s real estate vehicles. PAG had not replied to inquiries from Mingtiandi requesting further information by the time of publication.

TRS and another pension fund manager, the Employees Retirement System of Texas, previously committed a combined $225 million to PAG’s Secured Capital Real Estate Partners VII, an opportunistic real estate fund targeting Japan, China, South Korea and other select markets. SCREP VII achieved a final closing of $2.75 billion in 2020.

Counting Up Commitments

Earlier this year, the Employees Retirement System announced a $50 million capital commitment to PAG’s third pan-Asian core-plus/value-add real estate fund. The pledge to PAG Real Estate Partners III was disclosed in a January 2022 report from ERS, a $35 billion fund supporting Texas government workers.

PREP III is the latest in the fund series after PREP II, whose mandate is to generate income-driven returns in gateway cities around Asia. PREP II closed on $2.25 billion in 2019.

PAG partner Broderick Storie leads the PREP strategy from Hong Kong, while the firm’s SCREP opportunistic strategy is piloted by Jon-Paul Toppino.

The most recent PREP fundraising round coincided with at least one big-ticket real estate buy, as Mingtiandi reported in January that PAG had agreed to acquire Cross Street Exchange near Singapore’s Raffles Place for S$810.8 million ($603 million).

The Hong Kong firm picked up the office and retail complex with the goal of upgrading the ageing property, according to sources familiar with the deal who spoke with Mingtiandi in January.

Lone Star State Looks Abroad

ERS has remained active in the region during the last few months, committing $50 million in May to KKR’s new Asia Pacific Infrastructure Investors II fund. The Luxembourg-incorporated fund is managed from the Manhattan-based private equity giant’s Hong Kong offices and follows the 2020-vintage Asia Pacific Infrastructure Investors, which is run from Seoul and closed on $3.79 billion in commitments in 2021.

Mingtiandi reported last September that another institution, the Texas Permanent School Fund, had pledged $50 million to LaSalle Investment Management’s first dedicated China logistics vehicle. The Chicago-based firm is targeting a fund size of $1 billion for LaSalle China Logistics Venture.

Further back, TRS committed $100 million in early 2020 to US-based Invesco’s Real Estate Asia Fund IV, providing a sizeable portion of the financing as the value-add strategy neared a $500 million first closing.