UC Regents explores creating in-house real estate operating company

Mr. Bachher said his team is particularly interested in properties with high anticipated demand, including data centers and other types of digital real estate, as well as senior and student housing, especially real estate off the University of California campus, Bachher said.

The investment staff is currently scrutinizing its real estate portfolio, which has lagged behind its benchmark. Mr. Bachher said his staff will try to figure out how best to invest in real estate going forward, how the UC Board of Regents’ investment bureau can differentiate itself as a real estate investor and where it has a competitive advantage.

The UC Board of Regents’ investment bureau owns land adjoining UC campuses that could be sold for someone else to develop, he said.

“We decided to hold on to them … build a structure to recruit talent,” said Mr. Bachher. Owning a real estate management company that has development capabilities or relationships with developers is “how money is made in real estate,” he said.

Within the Board of Directors’ $ 90.8 billion defined benefit plan, the real estate portfolio’s best-performing property portfolio was $ 4.3 billion in the 10 years to September 30 when it returned the same rate as the benchmark at an annualized net worth of 9.3% scored. According to the latest report from the Investment Office, the portfolio underperformed the benchmark for all other periods up to September 30th.

The $ 19.1 billion general endowment pool has a $ 1.2 billion real estate portfolio that exceeded its benchmark for the one year, three years, five years, seven years, and 10 years ended September 30. The best performance was the five year annualized period net return of 8.4% compared to the benchmark return of 6.9%.

When asked during the meeting to explain the difference in performance, Mr. Bachher said, “I asked the same question and, frankly, I don’t like the answer,” because if the UC Board of Regents invests in private real estate, it should it does better than a US real estate mutual fund index, he said.