Decision on Real Estate Investments
November 16, 2012
COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND: ACTION
STATE BOARD OF EDUCATION: CONSENT
SUMMARY: This item provides an opportunity for the committee and board to review and consider possible real estate investments.
STATUTORY AUTHORITY: Texas Constitution, Article VII, §5(f).
PREVIOUS BOARD ACTION: At the July 2012 meeting, the board approved the execution of an agreement with Mesa West Capital, LLC necessary to make an investment commitment of up to $75 million in Mesa West Real Estate Income Fund III, L.P. and with Oaktree Capital Management, L.P. necessary to make an investment commitment of up to $50 million if the vote of the board is to retain the current real estate allocation of 6% or up to $75 million if the vote of the board is to adopt a new real estate allocation of 8%, subject to continued due diligence and negotiation of fund terms.
In July 2012, the board approved a long-term strategic asset plan which included a new real estate allocation of 8%.
BACKGROUND INFORMATION AND SIGNIFICANT ISSUES: At the July 2006 meeting, the board set a strategic asset allocation which included a 6% allocation to real estate. At the May 2008 meeting, the board selected Courtland Partners as the Permanent School Fund’s real estate counsel to provide the expertise and advice related to the investment strategy of the real estate portfolio for the Permanent School Fund.
FISCAL IMPACT: The distribution of the Permanent School Fund is projected to be $2.0 billion during the 2012-2013 biennium.
PROCEDURAL AND REPORTING IMPLICATIONS: Not applicable.
PUBLIC COMMENTS: None.
OTHER COMMENTS AND RELATED ISSUES: None.
Michael L. Williams
Commissioner of Education
Staff Member Responsible:
Holland Timmins, Executive Administrator
and Chief Investment Officer of the
Texas Permanent School Fund