Molpus Woodlands Group, a Jackson, Miss.-based timber manager, hauled in about $488 million in mandate wins in 2011, boosting its assets under management by almost one third to roughly $1.6 billion. The manager capitalized on emerging public pension interest in timber, winning accounts with outsized returns.
For instance, the firm took home a $100 million mandate from the Florida State Board of Administration earlier in the year, which it followed up with a $200 million account from the Virginia Retirement System. The firm’s gross one-year returns at the close of the third quarter beat the NCREIF timberland index, coming in at 4.12% versus 0.26%.
“They’re a good firm and they provide good, solid research,” said Neil Rue, managing director at Pension Consulting Alliance. “People rely on them for their thinking in the timber area.”
Blackstone Group capitalized on public funds’ push to diversify into hard assets with steady returns. Funds such as the State of Wisconsin Investment Board, the Minnesota State Board of Investment, the New Jersey Division of Investment and both the Pennsylvania State Employees Retirement System and the state’s Public School Employees Retirement System ploughed $925 million into the firm’s domestic real estate funds.
The firm’s returns also blew away the competition. Blackstone earned an annualized 16.4% internal rate of return on $21.82 billion of deployed capital on its seven U.S. real estate funds. The return for the pool of all U.S.-based funds was 11.8%.
George Hopkins, executive director for the Arkansas Teachers Retirement System—which invested in Blackstone Real Estate Partners Fund VII in October—said Blackstone’s analytical muscle had been a factor in the decision. “When you get out of core [real estate] and into opportunistic, you’d better have people who can find a channel,” he said, noting that the firm is quick to incorporate new information into its investment strategy.
UBS benefitted from plan sponsors clamoring for stable, return-oriented investments such as core real estate and farmland, winning multiple public fund mandates in 2011. For instance, funds such as the Iowa Public Employees Retirement System, the Kansas Public Employees Retirement System and the Fort Worth Employees Retirement Fund invested $270 million with the firm’s real assets and real estate units, including the firm’s comingled core real estate Trumbull Property Fund, according to iiSEARCHES.
Alan Martin, a partner at Cambridge Mass.-based NEPC, said that as valuations for opportunistic and value-added real estate dipped, many plan sponsors put their money into core funds. Fort Worth Executive Director Ruth Ryerson noted Trumbull’s commitment to core real estate and its diversified portfolio as reasons why the fund chose to invest.
Many others gravitated toward farmland. The firm’s AgriVest composite, made up of all accounts that invest in agricultural real estate, returned 11.96% for the year ending Sept. 30, beating its custom core farmland index, which came in at 11.57%.