New Mexico Pension Grants Staff Authority to Pull Trigger on Some Alternative Transactions

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The pension fund that manages assets for New Mexico’s teachers and professors disclosed this week it has given investment staff a bit of new authority: the ability to execute transactions on alternative secondary markets.

Reported by Pensions & Investments:

New Mexico Educational Retirement Board, Santa Fe, delegated general, ongoing authority to the staff to execute transactions on the alternative investment secondary markets “when it is deemed appropriate by staff and the asset class consultant,” said Bob Jacksha, chief investment officer of the $11.2 billion pension fund, in an e-mail.

This is blanket authority across all non-publicly traded asset classes, Mr. Jacksha said.

“Secondary transactions are difficult to execute in the traditional committee approval structure/timetable,” Mr. Jacksha wrote. “This authority is in recognition of that fact. It is expected to be used sparingly.”

The authority is not attached to any one specific transaction, Mr. Jacksha said.

The pension fund had $271 million in private real estate and $849 million in private equity as of June 30.

The New Mexico Educational Retirement Board manages $11.2 billion in assets for 132,000 members.

New Mexico Pension Commits Additional $50 Million To Real Estate

businessman holding small model house in his hands

The New Mexico Educational Retirement Board will make a $25 million commitment to a vehicle that invests in distressed Western European properties, and will commit an additional $25 million to another fund that invests in healthcare properties in the U.S.

From IPE Real Estate:

The New Mexico Educational Retirement Board is to make an additional $25m (€19.6m) commitment to Kildare European Partners I.

The pension fund also made a $125m investment in April of this year.

Mark Canavan, head of real assets at the pension fund, said New Mexico had concluded the manager of the fund was “best in class”.

European Partners I could have a total equity raise of as much as $2bn for opportunistic real estate, with a 13% potential IRR.

The vehicle will invest in individual and entity-level assets with operating companies in Western Europe.

New Mexico is also making a $25m commitment to Hammes Partners II, having approved an initial $25m commitment late last year.

The fund is investing in a variety of US healthcare-related properties, with a projected $300m total equity raise.

Hammes II is the first fund product offered by Hammes – all previous investments were invested on behalf of high net worth individuals, family office and publicly traded healthcare REITs on a deal-by-deal arrangement.

Capital for the two funds comes from New Mexico’s increased targeted allocation to real estate – up from 5% to 7% earlier this year.

The Retirement Board isn’t the only pension fund putting more money in the Kildare fund. In September, CalSTRS committed $100 million to European Partners I; the fund now has committed a total of $200 million to the vehicle.

New Mexico Pension Reaches Settlement With Ex-Chairman Marred By Scandal

board room chair

Bruce Malott, the ex-chairman of the $11 billion New Mexico Educational Retirement Board, is currently the defendant in five separate lawsuits stemming his handling of pension investments, which were allegedly marred by conflicts of interest.

Mallot resigned from the pension fund as a result of the controversy. But he claimed that the Retirement Board should pay his attorney fees accrued during those lawsuits. The Board initially refused, but Mallot sued the board over the fees, and today the Board has agreed to pay $125,000 worth of his attorney costs.

Reported by the Albuquerque Journal:

The Educational Retirement Board has paid its former chairman, Bruce Malott, $125,000 to settle a civil lawsuit he filed to recover money for legal representation in lawsuits arising from a state investment scandal.

Malott filed the lawsuit two years ago when the board refused to pay for his personal attorney fees based on an attorney general’s opinion and because he was also represented by lawyers hired by the state.

“The attorney general’s opinion stated clearly that I should not be reimbursed for my legal fees if I had done anything wrong, so this payment only demonstrates what I have said all along – that I have acted with integrity throughout my tenure at the ERB,” Malott said.

ERB Executive Director Jan Goodwin said in a statement, “Consistent with a ruling issued by U.S. District Court Judge Martha Vázquez earlier this year, the agency determined that a settlement was in the best interest of ERB members and beneficiaries. Continued litigation held the risk of escalating costs and an uncertain outcome.

“The settlement allows ERB to focus its attention on its mission of serving its members,” she said.

The ERB was represented by the Attorney General’s Office in the lawsuit.

More details on Malott’s conflicts of interest during his tenure at the pension fund, from the Albuquerque Journal:

Malott was named as a defendant in five separate civil lawsuits that claimed investments by the State Investment Council and the Educational Retirement Board were steered to investment firms by placement agents with close ties to then-Gov. Bill Richardson’s administration. The main placement agent, Marc Correra, shared in more than $22 million in fees for steering state investments from the SIC and the ERB to firms that paid him.

Correra’s father, Anthony Correra, was part of Richardson’s inner circle, and raised money for his campaigns for governor and president.

While serving on the ERB, Malott received a $340,000 loan from the elder Correra through a trust.

Malott resigned as chairman of the ERB following an interview with the Journal about the loan, which had not been disclosed to the ERB, the public or to Richardson, who had appointed Malott to the ERB.

The New Mexico Educational Retirement Board is the pension fund for 90,000 of the state’s teachers. It oversees $11 billion of assets.