Chart of the Week: US LP Segmentation

Foundations and Endowments may be the majority but Pension Funds are the more active

 COW 7-30 411x 

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PERE Research & Analytics profiles over 1300 US LPs that invest or have invested into private real estate. Within the US, Foundations and Endowments make up the majority of investors, accounting for 41%. The largest of these institutions is The Bill & Melinda Gates Foundation, with an AUM of $40.4 billion as at December 2013.

Despite the overwhelming number of foundations and endowments in the US, the most active investors in private real estate are pension funds, which make up 30% of the total. Within the past year, a number of pension funds have been re-evaluating their target allocations to the private real estate asset class. Earlier this year, the California Public Employees' Retirement System (CalPERS) announced that it would be increasing its allocation to real estate from 9% to 11%, a policy that took effect this past July. This increase could potentially give CalPERS over $5.6 billion more to allocate to the asset class on a long-term basis.

Other pension funds had followed in the footsteps of CalPERS and increased its allocation to real estate. New Jersey Division of Investment is raising its real estate allocation from 3.2% to 4.25% while the Public Employees Retirement Association of New Mexico increased its inflation hedging portfolio from 8% to 12%, an allocation which includes real estate and real assets. Some pension funds, on the other hand, sought to reduce its allocation to real estate. The Oklahoma Firefighters Pension & Retirement System reduced its real estate allocation from 14% to 10%. Going forward, it increasingly seems pension funds will re-evaluate their target allocations and adjust accordingly for more real estate.