Texas State Board of Education has committed $100 million to a secondaries-focused separate account managed by Metropolitan Real Estate Equity Management on behalf of the Texas Permanent School Fund (PSF).
The board approved the commitment at its 15 September meeting, which was re-broadcast on its website. PSF will have full discretion on investments from the 24-month vehicle, according to Thomas Hester, a senior vice-president at real estate advisor Courtland Partners, who recommended the investment at the meeting.
Metropolitan, Carlyle’s real estate focused fund of funds unit, held the final close on Metropolitan Real Estate Partners Secondaries & Co-Investments Fund last February on $550 million, above its $400 million target, according to data from sister publication PERE.
The fund’s internal rate of return was higher than 34 percent, Hester said.
“The separate account arrangements are very common among our peers to access transactions either through co-investments or in this case, more targeted towards secondaries,” John Grubenman, PSF’s director of private markets, said at the meeting. “We think it’s a very efficient way to build sourcing and to access these transactions which are very attractive on a risk-adjusted return.”
PSF had previously committed $900 million to a separately managed account run by Neuberger Berman that invests in secondaries and co-investments, according to PEI data. Last October, PSF renewed the contract for another three years.
PSF had $34.5 billion in total assets as of 31 August 2015, according to its latest annual report.