Investors - JUNE 26, 2014

Texas C&D commits $100m to real estate, $70m to infrastructure

by Reg Clodfelter

The $23.5 billion Texas County & District Retirement System committed $50 million to Starwood Global Opportunity Fund X, which, along with a $50 million commitment to BPE Asia Real Estate Fund, brings the retirement system’s second quarter foray into real estate up to $100 million. Texas C&D also committed $70 million to EnCap Flatrock Midstream Fund III, its only infrastructure investment of the quarter.

SOF X, managed by Starwood Capital Group, is a $4 billion fund that launched in January 2014. The opportunistic fund, which has already raised at least $1.28 billion to date, will invest in a wide variety of property types in the United States and Europe with as much as half of its activity taking place in Europe. It is seeking gross returns in the range of 18 percent to 20 percent.

BPE Asia Real Estate Fund, which launched April 2013, is Baring Private Equity Asia’s first-ever real estate fund. The opportunistic fund is reportedly seeking $500 million and will focus its investments on a wide variety of properties in emerging Asian markets, such as China, India and Southeast Asia.

EFMF III launched in January 2014 with a $2.25 billion fundraising goal and closed in May 2014 after exceeding its target by raising $3 billion. The infrastructure fund, which is managed by EnCap Investments, invests in the midstream sector of North America’s oil and gas industry.

As of the end of first quarter 2014, Texas C&D had $370 million, approximately 1.6 percent of the total portfolio, tied up in private real estate with another $711 million invested in REIT equities. The retirement system’s real estate portfolio has performed quite well of late, seeing a one-year return of 17.9 percent as of March 31, 2014.

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