New Jersey pension director to leave

Timothy Walsh, who has overseen investments for the $74bn pension plan for three years, will be joining a real estate fund manager to help build up its North America business.

Timothy Walsh, director of the New Jersey Division of Investment, is stepping down from his position, effective 30 August, according to an announcement from the New Jersey State Treasury. The department said he will be assuming a real estate management position in the private sector but did not provide further specifics. 

Walsh told PERE he will become president and chief operating officer of Gaw North America, the North American business of Gaw Capital Partners, the Hong Kong-based real estate fund manager. With Gaw North America, Gaw Capital plans to ramp up its existing US business, which includes Los Angeles-based associate company Downtown Properties.

That firm, which Gaw Capital founder Goodwin Gaw launched in 1991, invests in office, residential, hospitality and land assets in Los Angeles, San Francisco, New York and Hawaii. Walsh, who initially will be based in Chicago, will be working with Gaw’s North America team, which consists of approximately 25 staff in Los Angeles and San Francisco.

Tim Walsh

Walsh’s resignation comes fresh on the heels of overseeing New Jersey's blockbuster sale of $1 billion of real estate fund interests on the secondary market to a partnership between NorthStar Realty Finance and Goldman Sachs Asset Management in June. The transaction was one of the largest such sales to occur on the real estate secondary market to date, and also notable for involving a nontraditional buyer who paid for the fund stakes at near-par.

His ability to execute unconventional, high-profile deals extended to the pension plan’s other asset classes as well. For instance, Walsh recently helped to orchestrate a creative sale involving a $150 million add-on to an existing mandate with Blackstone affiliate GSO Capital Partners for development capital investments in public and private homebuilders. Of the add-on amount, $100 million was funded by the sale of liquid investments held by Capital Trust’s High Grade Partners II, a $500 million 2008 vehicle that comprised New Jersey's state pension system and General Motors Pension Trust.

To finance the add-on, CTHG II will sell $329 million of its holdings in low-returning REIT and CMBS assets. Proceeds of that sale went to the add-on and were reinvested across other European real estate and debt strategies. 

Walsh joined the system in August 2010, after two years as chief investment officer for the Indiana State

The performance of the pension is so important, and we may need some more flexibility for the senior investment professionals.

Robert Grady

Teachers Retirement Fund, where he oversaw $8.5 billion in assets. Prior to that, he was a senior trader in fixed-income securities and foreign currencies for the Bank of Montreal, Nationsbank, Continental Bank and Bank Boston. He also ran his investment advisory firm, Walsh Financial Services, providing wealth management services for individuals, private trusts and corporate clients.

Meanwhile, the State Investment Council, which oversees New Jersey's division of investment, has formed a search committee for Walsh’s successor and will be considering both internal and external candidates, with the goal of having a new director on board by the start of 2014. In the interim, Deputy Director Chris McDonough will serve as acting director. McDonough, who joined the pension plan in January 2011, previously was CIO for the Philadelphia Board of Pensions and Retirement.

Robert Grady, SIC chairman, said under Walsh, NJDOI achieved a strong performance, with an overall return of 11.11 percent per year for the three years ended June 30, which was 106 points better than its benchmark.

He spoke to sister publication Private Debt Investor about the challenges of US public institutions to retain top-tier talent. “It does point to the longer term issue for New Jersey,” Grady said. “It may be time to restructure some of the civil service laws.”

Grady added: “The performance of the pension is so important, and we may need some more flexibility for the senior investment professionals. That may be something we look into with the legislature going forward.”

-Sam Sutton contributed to this story.