Bain Capital unveiled its new real estate investment operation Friday, a $3.4 billion portfolio and 22 staffers that it took over for the Harvard University endowment fund.
Faced with sluggish returns, the chief executive of Harvard Management Co., N.P. “Narv” Narvekar, has been overhauling the storied endowment’s investment approach, outsourcing some portions of its portfolio to outside firms.
Even though Narvekar identified the real estate portfolio as among the strongest segments of the fund in the last fiscal year, he said in September a spinout of the operations was underway. The deal with Bain had been rumored for weeks.
The team will be run by Dan Cummings, who is now head of real estate for the Harvard endowment. Under the terms of the deal, the Boston private equity company will begin managing the investment portfolio in February.
Harvard will continue to oversee real estate investments that are directly run by other outside firms.
Though the Harvard endowment will retain ownership of the real estate assets being managed by Bain, Bain said the unit could eventually include portfolios of additional properties managed for other investors.
Bain Capital co-managing partner Jonathan S. Lavine said his company’s investment strategies align closely with those of Harvard’s team. The endowment has invested in areas that managers believe will be influenced by broader economic trends, such as housing for the elderly as the population ages, or affordably priced homes in areas where real estate costs are rising.Andy Rosen can be reached at email@example.com. Follow him on Twitter at @andyrosen.