Texas Municipal plans real estate redemptions to help improve returns

IPE Real Assests
BY JON PETERSON
24 MARCH 2023

Texas Municipal Retirement System (TMRS) plans to issue real estate and fixed income redemptions worth over $1bn (€926.7m) by the end of 2024.

David Hunter, the pension fund’s CIO, disclosed in a meeting document that TMRS is planning to redeem the capital to help improve returns, reduce portfolio complexity and fees, and maintain the portfolio’s target allocation.

TMRS declined a request to disclose the amount it intended to redeem from its real estate investments.

Real estate accounts for $4.8bn or 13.7% of the pension fund’s $35.3bn total plan assets. TMRS has a 12% target allocation for real estate of 12% with a policy range of 7% to 17%.

The pension fund’s current investments in open-ended property funds include a $391m investment held in BentallGreenOak US Core Plus Fund, a fund which achieved a 22.39% internal rate of return, according to a pension fund board meeting document.

TMRS holds $530.7m in Invesco US Income Fund, a fund with a 13.53% internal rate of return, and also holds $368.5m in Harrison Street Core Property Fund which has an internal rate of return of 9.09%.

The pension fund has an investment in the Smart Markets Fund managed by Stockbridge valued at $570m with an 11.23% internal rate of return.