Decision on Real Estate Investments

April 8, 2016

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 November 2015 meeting, the board approved the execution of agreement(s) with Mesa West Real Estate Income Fund IV, GP, LLC, necessary to make an investment commitment of up to $75 million in Mesa West Real Estate Income Fund IV, LP, subject to continued due diligence and negotiation of fund terms and authorization for contract execution by the commissioner of education.

BACKGROUND INFORMATION AND SIGNIFICANT ISSUES: 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. At the July 2012 meeting, the board set a strategic asset allocation, which included an 8% allocation to real estate. Following the RFP process in July 2013, the board approved a contract to continue with Courtland Partners as the Permanent School Fund’s real estate counsel.

FISCAL IMPACT: The distribution of the Permanent School Fund is projected to be $2.1 billion during the 2016-2017 biennium.

PUBLIC AND STUDENT BENEFIT: The distribution of the Permanent School Fund will flow to the school districts and reduce the tax burden to the public and the state of Texas.

PROCEDURAL AND REPORTING IMPLICATIONS: Not applicable.

PUBLIC COMMENTS: None.

ALTERNATIVES: None.

OTHER COMMENTS AND RELATED ISSUES: None.

Staff Member Responsible:
Holland Timmins, Executive Administrator
and Chief Investment Officer of the
Texas Permanent School Fund