Brendan Cooper and Jared Morris, directors at Teacher Retirement System of Texas (TRS), joined the latest episode of Nareit’s REIT Report podcast to discuss how TRS tactically invested in REITs during a period of public and private real estate valuation divergence.
In 2022, the TRS Strategic Property REIT Execution and Delivery (SPREAD) team were monitoring a sell-off in public REITs and were ready to take action. One quarter of TRS’s total $400 million commitment was initially invested in December 2022, half was deployed in March 2023, and the remaining quarter was invested in October 2023. During that period, the internal rate of return achieved by TRS was 17.1%.
During the interview, Cooper and Morris also discuss:
- How TRS compares with other pension plans
- Methods used by the SPREAD team for comparing public and private real estate
- How the team went about sizing the $400 million REIT commitment
- Market liquidity and execution issues faced by the team
- How expected returns compared to those actually achieved
- Common challenges or hurdles that can make it difficult for investment committees to act during public REIT dislocations
- Ways in which the team might replicate, modify, or improve their strategy the next time around.