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Started By
Message
Arkansas Teacher Retirement System OKs investing up to $75M in a real estate fund
Posted on 8/18/22 at 11:42 am
Posted on 8/18/22 at 11:42 am
quote:
The fund's strategy is to capitalize on real estate sectors where growth is leading to tenant demand for spaces that are not available in sufficient supply in selected residential, industrial and healthcare markets, the system staff said in a report to trustees.
The associated property types are apartments, single family rentals, manufactured housing, warehouse and distribution centers, medical offices, and life science lab and offices.
I know this is a small fish in the grand scale of things but it's shite like this that is going to crush the housing market.
LINK
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Posted on 8/18/22 at 12:13 pm to boogiewoogie1978
What could go wrong
Posted on 8/18/22 at 1:29 pm to boogiewoogie1978
A teacher retirement fund buying up housing and managing it? Sounds like a disaster for those teachers banking on this fund long term
Posted on 8/18/22 at 1:41 pm to Upperdecker
quote:
A teacher retirement fund buying up housing and managing it? Sounds like a disaster for those teachers banking on this fund long term
Lasalle is the fund sponsor, the pension will just be an LP
Posted on 8/18/22 at 1:50 pm to Upperdecker
quote:
A teacher retirement fund buying up housing and managing it? Sounds like a disaster for those teachers banking on this fund long term
This is actually very common. Tons of state retirement plans diversify with hard/alternative assets. When you’re managing that many funds, 5-10% in hard assets is still a very large sum you can throw around.
It doesn’t always yield great returns, but the practice is common.
Posted on 8/18/22 at 2:01 pm to boogiewoogie1978
quote:
The associated property types are apartments, single family rentals, manufactured housing, warehouse and distribution centers, medical offices, and life science lab and offices.
Obviously still some risk to it, but the type of real estate is important to note. Single Family Rental has been steadily growing and lots more in the pipeline. On the high-end side, there are developers/builders building new SFR homes adjacent to master-planned communities charging exorbitant rents that people are happily paying. Should that change, these aren't foreclosures, they are just renters that don't renew, or possibly break a lease if it gets bad enough. The management company can re-lease at lower rents if they need to attract renters.
The lower end of this market is more risky but the company still owns the hard assets (the homes).
Posted on 8/18/22 at 3:56 pm to slackster
quote:
This is actually very common. Tons of state retirement plans diversify with hard/alternative assets.
It's concerning that this is now commonplace. What I find ironic is that the people whom this retirement fund represents can't afford a home due to their retirement system.
Good luck in retirement when you don't own a home.
Posted on 8/18/22 at 4:03 pm to Upperdecker
quote:
Sounds like a disaster for those teachers banking on this fund long term
teachers are going to get paid, tax payers will be on the hook. Just like what happen with the firemen in New Orleans
Posted on 8/18/22 at 4:04 pm to boogiewoogie1978
quote:
It's concerning that this is now commonplace
They are extremely sensitive to their allocation percentages between different asset classes. It's a diversification play.
ETA: Just looked up their 2020 Annual report. This $75M investment is only 0.5% of their total AUM. It's a $16.5B fund and their total allocation to real estate funds is ~8%
This post was edited on 8/18/22 at 4:26 pm
Posted on 8/18/22 at 6:56 pm to RTN
Keep it a small %.
The Louisiana Municipal Police Employees' Retirement System invested in golf courses (Tigers Woods, resurgence of interest, expected growth, etc.) and lost millions. Turns out they bought at the top of the market just before waning popularity brought about a nationwide glut.
The Louisiana Municipal Police Employees' Retirement System invested in golf courses (Tigers Woods, resurgence of interest, expected growth, etc.) and lost millions. Turns out they bought at the top of the market just before waning popularity brought about a nationwide glut.
Posted on 8/18/22 at 8:50 pm to boogiewoogie1978
I hate the government controlling things but it wouldn't be a bad thing to put some restrictions on corporate owned single family housing.
Posted on 8/18/22 at 10:16 pm to boogiewoogie1978
You should see how much of public pension funds are tied up in private equity. I think something like 35% of PE investments are from pension funds, and if you go down the rabbit whole on how PE calculates returns and then further juices them (unnecessarily taking out credit to delay calling on funds for one), then investing in real estate seems minor by comparison.
Posted on 8/19/22 at 11:23 am to RTN
quote:
They are extremely sensitive to their allocation percentages between different asset classes. It's a diversification play.
ETA: Just looked up their 2020 Annual report. This $75M investment is only 0.5% of their total AUM. It's a $16.5B fund and their total allocation to real estate funds is ~8%
My point was not about the fund itself but how this and many others are making single family homes unaffordable.
Posted on 8/20/22 at 7:36 pm to boogiewoogie1978
quote:
My point was not about the fund itself but how this and many others are making single family homes unaffordable.
They are 2-3 years late to the party on this.
This post was edited on 8/21/22 at 10:09 am
Posted on 8/20/22 at 9:52 pm to boogiewoogie1978
Well the big thing is WHEN they will start? Timing is everything in this issue.
This post was edited on 8/20/22 at 9:53 pm
Posted on 8/21/22 at 3:14 am to 6R12
What could go wrong?
Posted on 8/21/22 at 2:54 pm to KCRoyalBlue
quote:
What could go wrong?
As long as they don’t invest in cattle futures or a a back water development called Whitewater they should be okay, but they could also make millions. Just ask H. Clinton.
Posted on 8/21/22 at 4:35 pm to Tarps99
Wife is a teacher. Last 2 managing directors before this one were caught with their hand in the till. Directed fund money to buddy managers and lost a ton. We would be better off in the state fund with everybody else.
Posted on 8/21/22 at 6:36 pm to bovine1
One of their more recent investments was a sweet potato farm between Delhi and Crowville.
Posted on 8/22/22 at 9:50 am to bovine1
quote:
One of their more recent investments was a sweet potato farm between Delhi and Crowville
The old Dawson farm?
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