Texas Pension Fund Places $100MM into San Francisco-Based Real Estate Firms

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By Jon Peterson

Texas Municipal Retirement System has approved new real estate commitments totaling $100 million with two real estate firms based in the San Francisco Bay Area. These companies are Stockbridge Capital Group and Berkeley Partners. Both firms declined to comment when contacted for this story.

The commitments approved by the pension fund were $50 million each going into the Stockbridge Value Fund III and IC Berkeley Partners IV, as stated by Texas Municipal in a board meeting document.

Stockbridge is shooting for a total capital raise of up to $500 million for Value Fund III. The company began its capital raise in the fall of last year.

The manager looks to invest in existing value-add real estate. The San Francisco Bay Area will be one of its targeted markets. Most of the capital for the commingled fund will be invested along the West and East Coasts.

The commingled fund will be investing in a diversified pool of properties to include a combination of office, industrial, retail and apartments. The fund is seeking to achieve target returns of 12 percent to 15 percent gross of fees.

Berkeley Partners is known as a buyer of small bay light industrial buildings around the country. According to its website, the company owns one asset in Hayward. The firm looks to buy properties with cash and up to 50 percent leverage.

The real estate manager has an investment focus of buying multi-tenant properties that are typically around 120,000 square feet and are placed in an in-fill location. The average tenant is around 5,000 square feet, but the range can vary from 1,000 to 50,000 square feet. The company currently owns and operates a nationwide portfolio of 4.3 million square feet that is valued at $338 million.

The commitments by Texas Municipal are the first two real estate investments that the pension fund has approved for the 2017 calendar year. Its targeted real estate pacing plan for 2017 is for up to $400 million in total commitments, as stated by the pension fund in a board meeting document. This capital will typically be placed into commingled funds.

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