COMMENT: Joining the club

Earlier this week, PERE unveiled this year’s Global Investor 30, our annual ranking of the largest institutional real estate investors in the world. 

Among the more notable shifts is the fact that this year’s cut-off level for making the top 30 grew by a whopping $1 billion to just north of $10 billion, while real estate investments by the overall group grew by a total of more than $25 billion, according to the research.

To be sure, institutional investors are pouring large sums of capital into real estate, especially some of the largest global players. Just this week, two such large investors – Qatar Holdings and GIC Private Limited – were tied to new multi-billion-dollar real estate deals. Qatar was joining up with Brookfield for a bid to acquire Songbird Estates and take control of Canary Wharf Group’s £6.28 billion property portfolio, while GIC was leading a consortium of investors to buy IndCor Properties, The Blackstone Group’s industrial real estate platform, for more than $8 billion.

Others are planning similarly-sized investing exploits. The California Public Employees’ Retirement System, for one, recently disclosed its investment plan for the coming fiscal year. As part of that plan, America’s largest pension intends to commit $6.6 billion to the asset class via a dozen managers in an effort to reach its target allocation. A number of Canadian pension plans also have similarly lofty investment goals for the coming years.

And let’s not forget Norwegian Government Pension Fund Global, which made its long-awaited debut on the Global Investor 30 this year. The sovereign wealth fund, the largest in the world with some $923 billion in total assets, has been buying up property around the globe at a rapid clip in an effort to reach its 5 percent target to the asset class. And with just 1.2 percent invested so far, it is expected to continue putting out large chunks of capital over the next few years. 

All this investment activity by the institutional elite is making it harder for the next tier of investors to catch up. Indeed, the next closest investor below those of the Global Investor 30 ranking, Manulife Financial, was $500 million off the pace, while the Ohio Public Employees’ Retirement System was nearly $1 billion shy. That is a significant difference from last year, when the next closest investors were just a couple hundred million off the pace.

While it would be incorrect to say that the investment activity of the institutional elite is creating a world of haves and have-nots, the elite certainly are growing more rapidly and gaining a competitive edge in transactions. For those investors in the next tier, the only ways to access similar deals may be to partner with the institutional elite or invest through the haves of the fund management world.

For a look at this year’s Global Investor 30, as well as profiles on each ranked investor, click here.