North Carolina’s retirement system is building on its decade-long relationship with Barings to target $2.1 billion in real estate debt opportunities at a time when large allocators are increasingly turning to specialist managers to find niche opportunities, particularly overseas.
Under the expanded mandate, Barings will deploy $1 billion in institutional-grade commercial real estate loans across North America and Europe for the $147 billion North Carolina Retirement System. An additional $800 million will go to Barings’ CMBS strategy, while $300 million will go to capital solutions — customized financings for corporate and non-corporate issuers with a focus on secured debt.
“By now broadening the scope of our partnership, we anticipate this will help us keep our pension plan stable and secure,” said North Carolina state Treasurer Brad Briner, an ACA finalist, in a statement.
Barings, a $502 billion global alternative asset manager, has served as an asset manager for the NCRS for over a decade. The new mandate follows prior commitments to Barings totaling more than $600 million. It managed about $2.5 billion in real estate debt mandates on behalf of the North Carolina Investment Authority as of the end of June, including real estate debt, special situation corporate debt, and transportation and other real assets.
A spokesperson said the investment authority made this move because the team expects persistent geopolitical stress, elevated long-term interest rates, and sticky inflation to make listed infrastructure, natural resources, REITs, and shorter-duration, high-yielding real estate credit more attractive than longer-duration investment-grade fixed income and high-yield corporate credit.
For years, Barings has been partnering with state pensions like Maryland, Alaska, and Michigan to target lower-middle-market local infrastructure investments.
Recently, the California State Teachers’ Retirement System expanded its relationship with emerging markets specialist ABS Global Investments from fund manager to investment partner.
Briner ran for North Carolina Treasurer on a platform to modernize the state’s investments. Once in office, he overhauled the investment office, getting rid of what he called “outdated statutes,” adding an investment advisory board, and rebalancing the portfolio. This meant cutting its cash position from nearly $14 billion to about $4 billion.
