Investment firm ousted over education board gift disclosures

The real estate investment firm entangled in a dispute with two State Board of Education members over gift disclosures got the heave-ho from the board Friday.

AEW Capital Management LP had qualified as one of the 68 firms that could be tapped for making future real estate investments for the $22 billion Permanent School Fund.

On Tuesday, the committee that oversees the school fund approved the full field of qualified candidates.

When the issue came before the board on Friday, the members plucked AEW from the list and approved only 67 eligible firms.

One concern raised by the members was that AEW had sent a monthly e-mail publication to board members Rick Agosto and Rene Nuñez, which they say violated the no-contact rule that remains in effect until the board makes a final hiring decision.

"I find it odd that this vendor would send me information on their company ... prior to our approval of their company. Especially the night before," Agosto wrote in an e-mail to Holland Timmins, the chief investment officer of the Permanent School Fund.

Also at issue were disclosures submitted as part of AEW's application that indicated the firm had given gifts to Agosto and Nuñez, including football tickets, golf games and meals.

Agosto, D-San Antonio, and Nuñez, D-El Paso, disputed that they had received the gifts, and Agosto produced receipts that showed he paid for some of the items. AEW subsequently amended its gift report, thought it did not rescind all the gift claims.

"As a public fund, we needed someone who could be a little bit more accurate," said board member David Bradley, chairman of the Permanent School Fund committee.

"At a minimum, it was sloppy," said Bradley, R-Beaumont. "At the worst, it was intentional."

Two other board members abstained from the vote, including Geraldine Miller, R-Dallas. Her family's company, Henry S. Miller Realty Services LLC, has a direct business relationship with AEW, according to a document submitted to the Texas Education Agency.

The Permanent School Fund is just entering the real estate market as part of a new investment strategy that is less reliant on traditional stocks and bonds.

AEW was vying for a spot in the pool of real estate investment managers that will bring possible investment opportunities to the school fund's real estate consultant, Courtland Partners Ltd.

kalexander@statesman.com; 445-3618