Pensions and banks led the way for institutional investment in 2021

North American strategies attracted the largest check sizes in a year where 85% of investors grew or maintained their exposure to the asset class.

Real estate remained a significant part of institutional portfolios in 2021, with 85 percent of investors maintaining or building their exposure to the asset class, according to PERE data.

Banks and financial service groups drove the bulk of that growth, with nearly two-thirds of those institutions who responded to the survey increasing their allocations to real estate and another 25 percent holding steady. Pensions followed a similar trend, as 60 percent grew their exposures and only 7 percent pared down their holdings.

Overall, public pensions continued to have the greatest average allocation to the asset class, at nearly 9.5 percent. Private pensions made up ground with an average exposure of 7.09 percent, up from 7.07 percent last year. Participating endowments and foundation had a larger allocation to the sector than those who responded in 2020, but no groups in that category reported a strategic allocation increase in 2021. Insurance companies saw their average exposure fall.

Among the top 20 commitments made last year, each of $200 million or more, 11 went to North American-focused strategies, including two for Blackstone Property Life Sciences. Multi-region strategies and those focused on the Asia-Pacific region were the next most popular, with four apiece.

Notably, three Canadian pension funds wrote large checks to Asia-focused funds, including the largest commitment of the year: CPP Investment’s ¥110 billion ($955 million; €850 million) ticket for GLP’s latest Japanese logistics fund.

Overall, more than half of the investors tracked by PERE were at their target allocation for the asset class. Of those that were not, 80 percent wanted more exposure to the space, setting up for another strong fundraising year in 2022.

Download a PDF of the full report here and the data here.