Lone Star State denizens like to boast that “everything’s bigger in Texas” — including some of the nation’s biggest public pension plans, such as the $130 billion Teacher Retirement System of Texas and the $26 billion Employees Retirement System of Texas. And these deep-pocketed plans are helping lead the charge among numerous large tax-exempt institutions aiming to leverage their financial heft into more attractive financial terms from their real assets managers, along with more customized investment structures.

More particularly, they are targeting real estate vehicles that reduce annual management fees and performance-based compensation compared with traditional commingled fund practices, while also providing for greater LP participation in investment decisions. Of course, migrating toward more directly controlled investment vehicles such as co-investments, joint ventures, club structures and separate accounts raises a multibillion-dollar question: