Teacher Retirement System of Texas (TRS) is considering investing $1.5 billion in the warehouse business. The move is part of the pension fund’s strategy to diversify its portfolio across the commercial real estate market, which has been hit by higher interest rates, according to a recent report by Bloomberg.
The investment would go to Bridge Industrial, a closely held real estate firm that specializes in warehouses and industrial-type commercial real estate properties. TRS board approved the proposal last Thursday, but the pension fund declined to comment on the details of the potential commitment.
TRS, which had $173 billion in assets under management as of September, has been increasing its investments in real estate, which accounted for about 17 percent of its total investments. Industrial real estate is currently seen as one of the more attractive investments in the industry, thanks to the growth of e-commerce and shifting trends across the retail sector, in general.
Pension funds have also been increasing their exposure to US real estate investment trusts that specialize in industrial properties over the last few years, which has been driven by the incredible growth and importance of the sector across the US economy. Investment in industrial REITs was up 103 percent from December 2019 to April 2022, according to a report by S&P Global.
Bridge Industrial works with a number of investment partners in the institutional investment space. In 2021, the firm announced a joint venture with the Canada Pension Plan Investment Board to develop industrial properties in supply-constrained markets across the US. The two entities allocated $1.1 billion to the joint venture, with CPP owning a 95 percent stake.
Bridge Industrial was founded in 2000 to focus on developing and acquiring industrial properties in the US and UK, according to its website. Its primary markets in the US include the Eastern seaboard, South Florida, the greater Chicagoland, Los Angeles, San Francisco and Seattle. In California, the company operates out of its offices in Los Angeles, and in the Seattle market, the company has an office in Bellevue, Wash.
Overall, the move by TRS to invest in the warehouse business is a strategic decision that aligns with the current trends in the commercial real estate market. As the e-commerce industry continues to grow, the demand for warehouse space is expected to remain strong, making it an attractive investment opportunity for pension funds and other institutional investors.
