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Among the most active known investors, US public pensions continued to make large fund commitments to real estate in 2022. California Public Employees’ Retirement System was the biggest spender, committing almost $2.5 billion across five commitments, according to PERE’s Investor Report for 2022. This included a $750 million check to Blackstone’s Mileway, the New York manager’s European logistics platform.
Texas County and District Retirement System was the busiest in terms of number of commitments, making a total of nine last year. US peers Illinois Municipal Retirement Fund and Teachers’ Retirement System of Louisiana were hot on its heels with eight commitments each.
Average real estate allocations across the investor universe flattened in 2022, increasing by just one basis point, according to the report.
More than half of all investors are underallocated to the asset class, the report showed. The dynamic is more acute in foundations and endowments, where more than two-thirds of that investor class are underallocated to real estate. Only 3 percent of foundations and endowments are at their target allocation, versus 8.3 percent of the broader investor universe.
Overall, public pensions continued to have the largest average allocation to the asset class, increasing their average exposure from 9.34 percent to over 10 percent. Insurance companies saw the biggest increases in their allocations, jumping from 5.35 percent to 6.13 percent.