All change as top investors shake up leadership roles

When Julie Donegan was elevated to real estate investment director at the California State Teachers’ Retirement System in August, it was the latest – and one of the most high profile – in a series of recent senior leadership changes among the world’s largest private real estate investors.

Indeed, 15 of the top 50 organizations on PERE’s Global Investor 100 ranking changed real estate bosses in the past two years, including five in 2023 so far, according to PERE data. Along with CalSTRS, investors that have appointed new leaders during that period include Abu Dhabi Investment Authority, Swiss Life, AXA Group, National Pension Service of Korea and Norges Bank Investment Management, the data shows.

Industry observers point to multiple reasons for the wave of leadership transitions. In the case of CalSTRS, the change at the top resulted from longtime real estate investment director Mike DiRe being promoted to senior investment director of private markets, overseeing real estate, private equity and inflation-sensitive strategies. PERE understands DiRe’s expanded role reflects the growing importance of private markets to institutional investors and the need for robust oversight and governance for what has become an increasingly large and complex portfolio within CalSTRS.

That made room for a younger executive to step up into the real estate investment director role. With Donegan, “you’re getting somebody who understands the organization and the portfolio and the objectives and will be able to carry on all the things that Mike’s done, but will also add in some new perspective,” says Eliza Bailey, chief executive at Los Angeles-based Belay Investment Group, which oversees CalSTRS’ real estate emerging managers program. “I think after over 20 years, that’s probably a good thing.”

The next generation

Handing the baton to a younger leader is a prevailing theme among the top-level executive appointments. Six of the 15 leadership changes among the top 50 investors involved an internal promotion.

“There’s certainly a baby boomer generation in this business, and I think we’re really transitioning that over to the next generation,” says David Schwartz, chief executive and chairman at Chicago-based multifamily specialist Waterton, which has been one of CalSTRS’ real estate managers for more than 20 years. “So there is quite a bit of that generational shift.”

In some cases, people are retiring, including those whose retirements have been accelerated, he notes. “These are people who are like, ‘I don’t have another cycle in me, I’m going to make my departure now.’ So I think these cycles historically have accelerated some movement.”

Gila Cohen, head of global institutional partnerships at Chicago-based private credit manager Monroe Capital, agrees the difficult time in the market cycle has been driving some of the leadership changes. “If you’ve been doing this for a long time, you just may not want to steer through another one of these challenging times,” she says. “I think some people have said, ‘I’ve done this for long enough. I want to do something a little less hard or a little bit different and give the next generation an opportunity to step in and show what they can do and how they would lead.’”

The market cycle aside, “covid reset a lot of people’s personal agendas as to what they want to do, and gave people a new perspective,” she adds.

Schwartz also attributes some top-level reshuffling to poor performance at certain investors. “There were particular LPs who went heavy in office and this was pretty devastating for returns, so leadership is changing things up,” he explains. “So, I think it’s a combination of a lot of different things, but certainly entering a real estate cycle like this, you always see movement in people.”