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The -- a billion dollar trade was par for the course for my next guest just previous life.
For nearly five years he was head of a 110 billion dollar pension fund and it was named number one and pension funds and 2010.
And now he's made the move back to the private sector co founding his own company but he's only investing in a single state.
In fact is so confident in the state that he calls at the Germany or the China of the US he's -- -- partners bouncing partner Stephen.
Look like Stephen -- I find your situation is so fascinating you just killed at a pension fund world.
And now it's almost like -- switch sides because people used to come to you and sell you want their ideas -- that you would invest in them.
Now you were selling them on your idea which is very much Texas centric talk about what you're doing right now.
Well thanks -- I appreciate the -- -- -- let me take a little bit more about my background.
Before I joined TRS I was the CEO of -- two billion dollar multifamily -- called summit properties.
In fact in during my tenure -- invested in the reviewed earned 20% a year and that was through the 9/11 downturn.
How we sold the company in 2005 to Camden Property Trust and at that time I -- the market was overvalued that was a couple years early now in retrospect.
I spent three years teaching real estate of the University of Texas and in the fall of 08 I had the chance to give back the teachers' retirement system of taxes a 110 billion dollars.
Represents one point three million teachers and all the workers in the public school system.
In fact it's 5% of all Texans are either paying money in a retired.
I spent four years there working for the chief investment officer Brett Harris.
I established five goals and told -- that I thought it would take about five years to get those five -- on the last gold being find my replacement.
And the January of this year I told Brit we've gotten everything done -- it was time.
And so in June are retired from teachers having invested -- 116 different investments just -- of thirty billion dollars -- if you mentioned.
We -- the number one performing pension plan in the country when he ten.
Another -- -- -- roots in in real estate and you're really going centric when it comes to office buildings in Texas why.
Well -- I think as the best state in the country we -- we've got the financial strength of Germany in the low cost production of China.
You look at the GDP numbers we've we Texas had three point 6% GDP.
This year and the Department of Labor projects -- average 5% over the next two years that's more than twice the US average.
And -- you know Stephen went when you look at what's happening with.
Pension funds a lot of our viewers perhaps have investments in them -- put money in to them.
Many of them are struggling so when it comes to what you used to do when you were running the teachers' retirement fund.
You went to these private equity guys I want people to know this you went to the fund managers he said cut your face I'm not dealing with this anymore tell people.
What is threshold for fees that they should is what percent too much I'm Warren Buffett hates -- -- things people pay too much in fees.
Well I'm not gonna disagree with Warren Buffett but I think one -- I thank -- to fee structure especially in real estate more so than private equity fair and equitable.
The work I did with TI LPA the institutional limited partners association and -- That pension fund real estate association was to increase government's alignment of interest and transparency.
Having been a partner in a private company raising money from pension bonds having been a CEO who implemented sarbanes Oxley.
I'm a big proponent of transparency governance and alignment of -- that was the work we did with -- PA to put together the private equity principles that are now standard in the industry.
Tell me about commercial real estate now and and for the average investor who wants to get in.
Is it a good idea simply to look at the states that are healthy as such as what you believe is Texas with.
You know the unemployment rate that's -- -- lower than what we see on the national average because that must mean that businesses are doing well on their -- -- office property.
Absolutely you've got two factors going on I think we are in tough economic times of fiscal cliff the massive.
Not only federal but many state level -- are at all time high.
You've got the Middle East crisis is going on I think it's going to be a tough sledding for a few years and it'll be tough for businesses to grow top line so.
They're gonna focus on their bottom line they're gonna focus on expenses and I think taxes and offer a great opportunity.
For them to have a lower cost -- production lower cost of wages.
Lower cost of of office space you also have a situation where office construction is -- a fifty year low.
So -- simple economics increasing demand limited supply returns will be higher.
As we finish up Stephen you know the traditional investor always looks at 60% stocks 40% bonds.
You said don't do that anymore look at alternative investments that there are better ways to get -- right.
I agree especially if you're a long term investor like a pension plan.
Or like individual with their 401K or there.
Retirement accounts if you've got -- horizon of five plus years you really should look at illiquid assets like private equity and real estate.
Many of the private equity firms are now starting to tap into.
Individuals in giving them alternatives to invest where is historically it's only been available institution.
Real estate the -- industry gives the individual great opportunity to invest in real estate.
I do think the best opportunity those in private real estate and unfortunately there's not.
Public vehicle or an individual vehicle for individuals to invest in and what will be doing a -- bridge.
Next time you're in New York please -- see -- -- we love your perspective.
Well thanks -- -- be honored thank you so much Steven will want to cap bridge -- Christmas elegant to thank you so much founding partner and and he really -- -- people who really put the screws to a lot of high high you know feed people out there are so good for him closing.
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