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Baylor to make foray into RE

The $1.1 billion Baylor College of Medicine endowment fund in Texas says it is planning to commit up to 10 percent of its funds, around $100m, to the real estate asset class in a bid to secure long-term returns.

The Baylor College of Medicine endowment fund will start investing in the real estate asset class for the first time, committing up to 10 percent, an estimated $100 million (€63 million), of its funds to the sector.

William Walker, chief investment officer of the $1.1 billion Texas fund, told PERE real estate allocations have been considered for some time, but the timing had never been right.

However, with a general downturn in the market the fund was now keen to ensure “more attractive long-term returns.”

The fund, he said, would consider real estate investments within the US and internationally, although he stressed the college fund would probably look to North America while it “got comfortable with the asset class.”

He continued: “We have looked at real estate for a long time and never felt that the timing was particularly good. We felt there were better value asset classes out there. But we hope that’s going to change over the next couple of years.”

Walker said the fund had made the decision to invest in real estate late last year but would “move slowly” into the arena “to get comfortable with the asset class.”

The Baylor College of Medicine is one of the US’ leading scientific research institutions and is undergoing a large redevelopment plan to improve facilities.

Walker said the endowment fund would be providing some of the funds for the work, resulting in a “cautious” approach by investment managers towards too illiquid assets. But he said real estate was still proving an attractive option although it would be on a “go slow approach.” Baylor has a target allocation to private equity of up to 10 percent.