Survey finds capital flows to large fund managers

June 13, 2016 admin

Niagara Falls USA

The big get bigger. That’s the message of the Fund Manager Survey 2016 by the National Council of Real Estate Investment Fiduciaries, in collaboration with the European Association for Investors in Non‐Listed Real Estate Vehicles and the Asian Association for Investors in Non‐Listed Real Estate Vehicles.

The top 10 fund managers collectively were responsible for 41.0 percent of the $2.2 trillion in combined gross real estate assets under management in 2015, up from 36.5 percent in the previous year’s survey. And the three largest real estate fund managers — Brookfield Asset Management, The Blackstone Group and TIAA Global Asset Management — each have global real estate assets under management exceeding $100 billion.

Brookfield and Blackstone continued to hold the top two spots in the ranking (each firm is 50 percent larger than it was three years ago, as capital has flowed toward the largest fund managers). Industry consolidation is also at work. The merger of TH Real Estate and TIAA Asset Management pushed the combined firm up in the rankings and caused CBRE Global Investors to drop from third place to fourth.

Brookfield has the largest amount of North American assets under management, with $97.5 billion. Aviva Investors has the greatest amount of European assets under management, at $49.2 billion. CapitaLand has the most Asia Pacific assets under management, at $43.9 billion.

In looking at client base, pension funds represent the largest segment of institutional investors in real estate, with 48.6 percent of the investment in unlisted direct real estate vehicles, followed by insurance companies (13.9 percent) and sovereign wealth funds (9.4 percent).

The results of the NCREIF/INREV/ANREV survey are consistent with other industry research. The 2015 Global Investment Managers survey jointly conducted by Institutional Real Estate, Inc. and Property Funds Research also found assets under management being consolidated by large investment managers. And a recent article in Institutional Real Estate Americas, “Big fish, little fish,” also looked at the rising dominance of a few mega-firms.

A small number of firms appear to be amassing large portfolios of real estate on behalf of institutional investors, who are voting with their feet — or their capital — in favor of industry consolidation.

LorettawebfinalThe views, statements and opinions expressed in this article are those of the author and are not necessarily those of Institutional Real Estate, Inc.

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Loretta Clodfelter is editor of Institutional Real Estate Americas.

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