New York State Common Retirement Fund Allocates $300 Million to Artemis Real Estate Partners

(October 9, 2011) — The $146.9 billion New York State Common Retirement Fund has allocated $300 million to Artemis Real Estate Partners as its initial investment in a new emerging manager component of the Fund’s real estate portfolio, State Comptroller Thomas P. DiNapoli has announced.

“I am proud to announce the Fund’s investment with Artemis Real Estate Partners to kick off our real estate asset class emerging managers program,” DiNapoli said in a statement. “With the emerging manager program now in place across our asset classes, the Fund has affirmed its status as an innovator in the field and shown once again its commitment to enhancing diversity and opportunity while improving its bottom line. The Fund has a strong historic track record of developing relationships with successful financial managers of the future.”

Deborah Harmon, CEO of Artemis, added: “Artemis is honored to help the Fund implement its emerging manager initiative in the real estate asset class,” said . “We are excited to execute this strategic mandate to create joint venture partnerships with established and newly formed emerging managers. Our efforts will reflect Comptroller DiNapoli’s commitment to identifying and increasing opportunities for these managers.”

The move by DiNapoli in announcing the New York scheme’s emerging manager program in real estate follows a commitment the Comptroller made in 2007 when he took office. The objective of the program is to provide the pension with access to real estate joint venture operators that have less than $1 billion of equity capital under management, the scheme stated.

Currently, the fund invests about $6 billion with emerging managers, with the goal of the program being to invest assets with smaller, newer funds and separate account managers. Emerging managers provide diversification for the Fund’s portfolio by investing in different structures and markets than larger firms, according to the scheme. “The emerging managers program enhances the Fund’s ability to partner and invest with experienced, but younger individuals and newer firms that are expected to graduate into large, institutional, best-in-class investment managers,” the fund stated.

Similarly, in August, the California Public Employees’ Retirement System (CalPERS) approved a program for emerging real estate managers who have less than $1 billion of assets under management. When asked whether CalPERS’ decision to target smaller managers was partly fueled by recent evidence that smaller managers tend to outperform their larger counterparts, spokesman Clark McKinley replied:

“CalPERS is not a research organization that has any way of corroborating research about the performance of smaller managers. However, anecdotal experience and what we know of research informs our rationale for investing in emerging managers. When done right, we’ve experienced superior returns from emerging managers in asset classes…Smaller managers are more flexible, can have more focused strategy and offer insights and experience for finding opportunities in underserved or overlooked markets.”