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Oklahoma considers Landmark commitment

The $13bn Teachers Retirement System would pay a 1 percent management fee to the Landmark Real Estate Partners VII fund, which is targeting $1bn.

The Oklahoma Teachers Retirement System is considering a commitment to Landmark Real Estate Partners VII, according to documents from the system’s June board meeting.

Landmark VII launched earlier this year with a $1 billion target. Earlier this month, the fund held a first close on $560 million, a source familiar with the matter told Secondaries Investor. The fund will purchase real estate fund interests of diversified vintage years, geographies, managers and strategies on the secondaries market.

In the fund, Oklahoma would pay a 1 percent management fee and a 12 percent incentive fee for profits over 8 percent, according to the documents. Other limited partners in the fund include the Kentucky Teachers’ Retirement System and the Board of Regents State of Iowa, according to PEI’s Research and Analytics division.

Fund VII is led by Landmark chairman Francisco Borges, president Timothy Haviland and partners Chad Afeld, Robert Dombi, Paul Mehlman and James Sunday.

Landmark’s prior real estate fund, which closed on $718 million in 2010, has generated a 74.5 percent return over the past five years and a 27 percent return in 2013, as of 31 December 2013. Meanwhile, Landmark Fund V, a $386 million vehicle, has generated a -9.5 percent return over the past five years and a 25.3 percent return last year.

Landmark is one of eight candidates in Oklahoma’s value added real estate fund manager search and the only secondaries-focused fund. Oklahoma considers value added managers to be of medium-to-high risk, because the properties typically require improvement and exhibit operational problems.

Earlier this year, Oklahoma issued requests for proposal for value added real estate managers and for opportunistic managers real estate managers, reported Secondaries Investor’s sister publication PERE. The RFPs are part of Oklahoma’s plan to meet its increased real estate allocation.

Last year, Oklahoma said it planned to allocate an additional $283 million to its real estate programme. Its target allocation to real estate bumped up to 7 percent from 5 percent during the third quarter in 2013.

Oklahoma has roughly $13.1 billion of assets under management.