Global Investor 50: Leading lights

This is the second year that PERE’s ranking of the world leading investors has hit the 50-player mark, and what stands out above all else is stability, particularly in the top 30, with many of the same names featuring as in 2017. The world’s largest pools of capital have increased their commitments again in 2018 at $991 billion, compared with $896 billion a year ago. The commitment of the leading 30 investors has also increased from $719 billion in 2017 to $794 billion.

Looking geographically, North American investors make up almost half of the list with 24 ranked. European investors fare less well this year, occupying 16 spots, down two from 2017. Europe’s loss is Asia-Pacific investors’ gain; the region is represented seven times in this year’s list, compared to five last year. There is no change in the number of MENA-based investors – only three again – but it is worth highlighting that two of those are in the top ten.

Abu Dhabi Investment Authority continues to be in a league of its own, refusing be nudged off the number one spot it has held for several years now. The investor’s capital commitment has increased to $62.1 billion from $46.9 in 2017.

Europe’s star triumvirate – Stichting Pensioenfonds ABP, which invests in property via APG Asset Management, Allianz and AXA – continue to dominate the top five, albeit with some position trading between them; Allianz moves up from fourth to second place. The biggest change in the top five is the absence of Qatar Investment Authority, which falls to eighth place from third in 2017; its capital commitment has decreased from $42.1 billion last year to $35 billion in 2018.

US investor TIAA Global Asset Management/Nuveen is in 5th place, up from 7th last year.

The star movers in the 2018 rankings are Italy’s Assicurazioni Generali and Washington State Investment Board, which have moved up six places to 15th and 21st spots respectively.

Finally, a number of new entrants make it on to the list this year; six in total, half of which are headquartered in Asia-Pacific: Taiwanese insurer Cathay Life Insurance; the Hong Kong Monetary Authority and the Korean Investment Corporation.

METHODOLOGY: What makes a top 50 investor?

The methodology for deciding what qualifies – and disqualifies – firms from making the final list

In covering private real estate we have been continually asked by investors and fund managers a seemingly simple question: who are the industry’s largest investors? Ranking the largest institutional real estate investors in the world requires rules, judgment and a willingness to dive into the gray areas of a non-transparent asset class.

Hence we have based the Global Investor 50 on the market value of investors’ private real estate investment portfolios both through third-party managed investment vehicles and direct property investments. The ranking excludes investments in REIT or real estate company stocks as well as mortgages or mortgage-related securities. The ranking also excludes real assets, such as infrastructure or energy assets, and assets managed on behalf of third-party investors as can be the case with certain insurance companies.

What counts?

• ‘Private real estate’: The definition of private real estate, for the purposes of the Global Investor 50 is property used for commercial/business purposes such as offices, hotels, retail, industrial and numerous other niche property types, as well as multifamily/apartment properties. It may include portfolios of single family houses, assembled via an institutional platform.
• ‘Market value of private real estate portfolio’: The market value of the investment portfolio covers capital definitively invested in real estate either directly or indirectly. In the case of direct investments, it means equity invested in a property or properties. In the case of indirect investments, it means equity invested via a private real estate investment vehicle operated with discretion by a third-party such as a separate account, joint venture, commingled fund or other structured vehicle. We count capital drawn down by the third-party manager for investment in real estate and not commitments made by the investor that are yet to be drawn down. It does not count capital allocated to but not committed to non-discretionary vehicles managed by third-parties, such as open-ended joint ventures whereby the discretion lies solely with the investor. In such cases it is deemed that no capital has in fact been committed.

What does not count?

• REITs and real estate company stocks: We consider these to be stock investments and part of an institution’s equity portfolio, regardless of how an individual institution may classify it.
• Individual single-family homes: These are rarely owned by institutional investors; more often they are owned by their occupier.
• Mortgages and mortgage-related securities: Similarly, we consider these to be fixed-income investments and representative of that portfolio.
• Structured debt: Again, these instruments, such as collateralized bond obligations and collateralized debt obligations, would be considered fixed-income investments and representative of that portfolio.

What does not count as ‘committed and/or invested capital’?

• Committed capital not yet drawn-down: We do not count capital that has been committed to a private real estate fund but not yet drawn down by the fund manager.
• Expected commitments: No matter how confident an institution is about its investment goals and/or allocation, we do not count pending or future commitments and investments or the uncommitted portion of an institution’s target allocation.
• Opportunistic capital: An institution that has the ability to opportunistically invest in real estate deals as part of a larger allocation but does not have a dedicated allocation or personnel for doing so is not considered for the rankings. In other words, an institution that has the ability to invest $2 billion in alternatives will not be counted unless that capital has been segregated into a specific program for real estate and/or assigned a dedicated real estate professional that is actively scouting for investments.