Austin-based TRS is favouring US real estate these days
The Teacher Retirement System of Texas committed $1.64 billion to private real estate funds in 2024, marking a 61 percent surge from the pension manager’s total commitment the year before.
The annual increase was due entirely to TRS’s December real estate commitments totalling nearly $691.7 million, as disclosed this week in a monthly update, with the late boost ensuring that the full-year commitment would surpass 2023’s total of $1.02 billion.
TRS made the December commitments to five separate funds targeting US real estate, led by $400 million earmarked for an opportunistic vehicle managed by Manhattan-based Blue Owl Capital.
Austin-based TRS manages $211.6 billion in assets on behalf of public education workers in the second-biggest US state. The pension plan reported a one-year investment return for fiscal 2024 of 12.83 percent as of 31 August, or 3.55 percent above the benchmark.
Asia Investments Paused
TRS’s most recent Asia real estate commitment dates to December 2023, when the pension fund allocated $100 million to Secured Capital Real Estate Partners VIII, an opportunistic strategy of private equity firm PAG.
Texas TRS chief investment officer Jase Auby
SCREP VIII, which has yet to be publicly announced, is the follow-up in the fund family after SCREP VII reached a final closing of $2.75 billion in 2020. The prior vehicle invests in high-yielding real estate projects across Asia, with a particular focus on commercial properties in Japan, where the fund managers of the Secured Capital series are based.
TRS and another Texas pension fund, the Employees Retirement System, committed a combined $225 million to SCREP VII. PAG had also received commitments from TRS in the amount of $10 million each for two 2022-vintage opportunistic real estate funds, Kona Co-Invest and Mirai Co-Invest.
TRS continued to look abroad in 2023 with a $125 million commitment to TPG Asia VIII, a regional buyout fund managed by Texas-based TPG Capital.
In early 2022, the Employees Retirement System announced a $50 million 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 January of that year by ERS, which supports Texas government workers.
Year-End Push
December real estate commitments did the heavy lifting for TRS in each of the last two years.
Last month’s sum of $691.7 million accounted for 42 percent of the 2024 total, while the December 2023 commitment of $450 million constituted 44 percent of the full-year amount.
SCREP VIII was TRS’s sole commitment to Asia real estate in 2023-24, with domestic and Europe-focused funds favoured during the period.
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