HomeMy WebLinkAbout2021-05-27-RB-min Minutes of the May 27,2021 Retirement Board meeting:
Present: Robert Cunha,Joseph Foley,Alan Fields, Fred Weiss,Carolyn Kosnoff, Marguerite Oliva,and Jim Condon
Absent: None
NEW MEMBERS: (4)Amber Rickers,Nicole Foss, Student Support Instructors; Jennifer Caruso,Instructional
Asst.;Higor Fernandes,Equipment Operator;
RETIREMENTS: None
DEATHS: None
The Lexington Retirement Board met remotely through Zoom tele-conferencing during the Covid-19 Pandemic.
The Town Clerks Office posted the meeting,which included the information for any interested party to join the
call. All Board members were present for this meeting. Chairman Robert Cunha called the meeting to order at
8:35 am.
The Board accepted the 052821 Warrant and the May payroll. The April minutes and March financials were
reviewed and approved.
Robert Cunha reviewed the May agenda with all Board members and staff in attendance. It was noted the Board
received three(3)distributions and one(1) reimbursement within the past thirty(30) days.
There is no update to report on the matter of Robert Magarian. The Retirement Board will continue to garnish Mr.
Magarian's pension payments until further notice.
The Board members were advised to review PERAC memo#14 regarding 2"d qtr. 2021 Board training. All courses
remain offered online due to the ongoing Pandemic. A reminder that the MACRS Conference will be held virtually
June 6`"and June 7`". Members wishing to attend must sign up within the next week.
Stephen MacLellan presented the Meketa portfolio update at 8:45 am. The portfolio balance as of April 30,2021 is
$221,001,085.00, up$8.1m from the prior month. The market continues to rebound from the pandemic. Each
month this year has posted positive gains. US equities continue to drive the market. The portfolio is now up 7.6%
YTD. The cash holding remains high, but the Board will be looking to move some cash into a Direct Lending fund in
the near future. Stephen mentioned they are not seeing many defaults on loans from Short Term Senior Lenders
at this point,even with interest rates on the rise. The portfolio will remain as is for the time being. No real
changes are on the horizon.
Rob Jacobson presented the Direct Lending interview for Golub Capital. Golub is an award winning middle market
lending firm with over$35b in Capital under Management. They remain focused on North American lending only
and deal with First-lien first out senior secured floating rate loans. Main goal is to generate consistent net returns
via low defaults by companies. Four categories that Golub will work with are Software, Healthcare,Consumer
Specialty Stores,and Diversified Industries. These for categories are all growing by the day with positive returns.
The thought is these sponsored backed companies are less risky and support better credits than the non-
sponsored companies. Golub's annual default rates remain under 1%. The portfolio they manage has held on
throughout the Pandemic. They feel stronger today and even pre-pandemic levels. Michelle Joyeux briefed the
Board on a product offering called GCP14. It is similar to GCP13, but more attractive in todays market as we head
out of the pandemic. This product is designed to excel in uncertain times and offers strong principal protection. It
will also provide a natural hedge against interest rates. Expectations are 10.5%-13%in returns. Returns are
issued quarterly. Golub will deploy 25%of the initial investment immediately. She wrapped up the presentation
at 9:20 am.
David Schwartz,Andrew Gorgon,and Kara Herskowitz from Ares presented for the Direct Lending interview. Ares
is one of the largest U.S. direct lending firms. Currently hold over$207b in AUM. They have$48b of direct lending
gross originations in the last three years with average annual losses of just 0.001%. Ares feels they are the
strongest non-sponsored lender in the U.S. industry. A leader in leveraged finance and private credit. Strong track
record for compelling risk adjusted returns through market cycles. Part of their strategy is to keep funding the
growth of their highest performing portfolio companies. Ares will review roughly 1,600 deals per year,yet only
select about 4%for lending purposes. The current lending fund Ares has offer has returned 13.7%as of 3/31/21.
David Schwartz wrapped up the interview at 9:40 am.
Sean Duff and Zia Uddinn presented for Monroe on the Senior Lending Fund interview at 9:45 am. Sean
mentioned the new fund with take on a total of$1.5b. A four year investment,with a seven year life cycle is the
parameter. This fund will offer a net levered return in the 9-12%zone,while unlevered target will be 6-9%zone.
The portfolio will be for companies in the U.S.that are well established. Deals will included both sponsored and
unsponsored firms. Monroe would like to raise up to$100m and have contractual lengths of the loans to be 4-5
years. It will be composed of senior corporate loans and opportunistic private credit. Zia Uddinn wrapped up the
interview at 10:00 am.
The Board spent a few minutes discussing each potential suiter for their Direct Lending manager. Alan Fields felt
Golub and Monroe are the strong candidates. Both are currently under contract with Lexington. Fred Weiss feels
the same way,and added it will be an attractive asset class to enter. With rates going up over the next few years,
this fund could suit our portfolio very nicely. Meketa offered to have the Board revisit how to approach this fund
monetarily and make a decision in June.
Fossil Fuel remains at 2.4%as of 03/31/2021. New report could be available at the June Board meeting.
Robert Cunha motioned to adjourn the meeting at 10:15 am,which was seconded by Joseph Foley,and
unanimously approved by Alan Fields,Carolyn Kosnoff,and Fred Weiss.
The next Retirement Board meeting will be held via Zoom on Thursday,June 24,2021 at 8:30 am.
Angelo Gordon and White Oak will present for review.
Robert Cunha,Chairman Alan Fields,Appointed Member
Carolyn Kosnoff,Ex Officio Member Joseph Foley,Elected Member
Frederick Weiss,Appointed Member