The $45.4 billion Pennsylvania Public School Employees Retirement System has withdrawn almost $1 billion of planned commitments to five real estate funds owing to the denominator effect.
PSERS told PERE it would no longer fund $925 million of expected commitments to five GPs, including Beacon Capital, Stockbridge Capital Partners, Mesa West, The Carlyle Group and Strategic Capital Partners.
It follows moves by New Jersey Division of Investment, which in January was forced to pull back on plans to commit $150 million to Morgan Stanley’s latest global real estate vehicle, Morgan Stanley Real Estate Fund VII Global, despite provisionally approving the investment at a June 2008 board meeting. Contracts had not been signed.
PSERS had proposed and provisionally approved the commitments between May and September last year, although contracts had not been signed. They included $100 million to Strategic Partners Value Enhancement II, $200 million to Beacon Capital Strategic Partners VI (and $200 million for co-investment purposes), $150 million to Stockbridge Value Fund, $125 million to Mesa West Real Estate Income Fund II and $150 million to Carlyle Asia Real Estate Partners II.
However, a spokeswoman for the pension said the commitments would not be funded at this time. “These were deals which were never executed or finalised and we decided to not fund them at this time due to the fact that our allocation to this asset class has increased due to the denominator effect.”