"The senior investment officer at the Virginia Retirement System was apparently terrified at having to disclose performance for the fund's $3.3 billion in private equity investments that he asked his staff to box up every quarterly and annual report they received from general partners and ship them back. Return them to us when nobody's asking for them anymore, John Alouf, now head of private equity for the pension fund told the managers. ... VRS says one firm with purported 93% annual returns (it won't diclose which one) refused to do business with it because of disclosure concerns", Kai Falbenberg at Forbes, 21 July 2008.
It's debatable how well Blackstone's real estate investments did. SF presents evidence that on an equally levered basis, they did no better than a basket of REITS since 1999. This may explain Stephen Schwartzman's hostility to fair value accounting, my 17 July 2008 post. It might make Blackstone look bad. From time-to-time I've looked at one of these things for a client as a possible investment. I remember one in particular I looked at in 1984. I read one number in the private placement memorandum (PPM) and handed it back to the client saying, "Don't touch this. It's a piece of junk". He was shocked. "That's it"? I told him I would spend as much time with it as he was willing to pay for, but he was wasting his time. The PPM showed a projected 172.2% IRR. Really. I told the client, "if this thing was so great you would never see it. The syndicator would keep it for himself. Or the Big 87654 partners who reported on the projections would have bought it themselves". The PPM contained projections with a Big 87654 firm's review report on them showing a 172.2% IRR. At the client's insistence I dissected the numbers. The syndicator had netted various cash flows to derive the 172.2% IRR, as opposed to separating the inflows and outflows. The projected IRR as I calculated it was about 28%. Not too shabby, but still the "investment" was what I call a "fee generator". This particular real estate partnership went bankrupt in the 1984-87 Texas real estate debacle.
Alouf should be fired. Virginia's Attorney General should see if there is a statute, like obstructing the operations of Virigina's legislature to indict Alouf under. What a fool. If this wonderful fund really makes 93% a year, its managers don't need Viriginia's money.