Chart of the Week: Allocation Changes for LP’s

Most LPs intend to keep their current allocation to real estate

 COW 6-10 411x

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In Q1 2015, PERE Research & Analytics conducted its annual 2015 PERE Investor Perspectives Survey in order to gauge Limited Partner sentiment towards private real estate. For the 2015 PERE Investor Perspectives Survey, the Research & Analytics team asked investors if they planned to increase, decrease, or maintain their current allocation to private equity real estate.

Of the 90 respondents, half of the LPs surveyed expressed that they would stick with their current allocation to private real estate over the next 12 months. A fairly large portion of respondents (26 percent) stated that they actually don’t have a specific target to real estate; rather, they choose their investments opportunistically. A fifth of respondents indicated that they plan on increasing their target allocation while conversely four percent of respondents intend to reduce.

Some LPs had already implemented plans to either increase or decrease their allocation to real estate this year. This quarter, the Ohio Bureau of Workers' Compensation doubled its allocation to real estate from six percent to 12 percent. Of that percentage, investments will be split between core (seven percent), core-plus (three percent) and value added strategies (two percent) with a focus on office, apartment, retail and industrial sectors.

On the other hand, the Yale University endowment cut its real estate target allocation from 19 percent to 17 percent in order to reduce illiquid investments.