PENSION MONEY FLOWS TO REAL ESTATEASSETS UNDER MANAGEMENT UP 2.8%
Skip to main content
pilogo-NEW
Subscribe
  • Subscribe
  • My Account
  • login
  • NEWS
    • Asset owners and the coronavirus
    • Alternatives
    • Consultants
    • Coronavirus
    • Defined Contribution
    • ESG
    • Frontlines
    • Hedge Funds
    • Investing / Portfolio Strategies
    • Money Management
    • Pension Funds
    • People Moves
    • Private Equity
    • Real Estate
    • Searches & Hires News
    • SECURE Act
    • Special Reports
    • WorldPensionSummit
    • Ron Schmitz
      Pandemic drives faster transition for Virginia to private markets
      Mubadala Investment Co. logo
      Mubadala draws on portfolio in coronavirus fight
      T.J. Carlson
      Texas Muni reduces downside risk during pandemic, finding opportunities now
      Scott Davis
      ‘Triage plan’ at Indiana system helped stem losses
    • James Zelter
      Private credit managers supersizing their loans
      Deborah Pederson and David J. Rothenberg
      Arena hires 3 to boost global marketing of private credit strategies
      BentallGreenOak agrees to acquire Metropolitan Real Estate Equity
      watch video
      0:45
      Private funds weathered 2020 turmoil
    • Kieran Mistry
      Hymans Robertson picks head for new non-traditional risk transfer unit
      Troy Saharic
      NEPC brings on director of new business development
      Bill Foley
      Foley-backed SPAC agrees to $7.3 billion deal with Alight
      Jason Schwarz, chief operating officer of Wilshire,
      New owners have big plans for future of Wilshire
    • Jonathan Gray
      Private equity managers turn attention to life sciences sector
      Investors falling head over heels for the pharmaceutical industry
      Pandemic progress comes with a price on cultural issues
      Vaccines keeping risk on table — for now
    • Morningstar turns detective to find gender from 5500s
      David Blanchett
      Morningstar says women build better DC plans
      Desktop with document showing pie chart with investment types along with a calculator
      OECD proposes revision of its DC ‘good design’ roadmap
      Dominic Scriven, director and portfolio manger of Dragon Capital, speaks during an interview in Ho Chi Minh City, Vietnam in 2006
      Vietnam gets its first private defined contribution plan
    • The tower of Stockholm City Hall rise above the city's skyline on Aug. 6, 2020
      Swedish funds managing $250 billion get slammed for ESG record
      Vapor rises from a petrochemical plant
      New York State Common inks more climate pacts
      Michael Herskovich
      BNP Paribas Asset Management names global head of stewardship
      TPT Retirement taps into low-carbon strategies
    • Springboard illustration
      LGPS Central execs to mentor U.K. students
      University of Washington/University of Minnesota
      Parametric creates quantitative fellowships for diverse students
      Roger Ferguson
      Finance museum honors TIAA's Roger Ferguson
      ERISA attorneys are taken to task by federal judge
    • Robert 'Rob' Shafir listens during a Senate Permanent Subcommittee on Investigations hearing in Washington on Feb. 26, 2014
      Sculptor hedge fund hits sixth straight year of outflows
      The WallStreetBets forum on the Reddit Inc. website on a laptop computer and the GameStop logo on a smartphone in an arranged photo.
      GameStop frenzy has hedge fund managers rethinking next moves
      Gabe Plotkin, chief investment officer and portfolio manager of Melvin Capital Management, speaks during the Sohn Investment Conference in New York on May 6, 2019
      Citadel, Point72 back Melvin with $2.75 billion after losses
      Shanghai skyline
      Global hedge funds struggle even in a more open China market
    • P&I Content Solutions
      Emerging Markets: Widening Investors' Lens
      Vaccination cartoon
      Rallying to meet the ongoing COVID-19 challenge
      Pandemic progress comes with a price on cultural issues
      Eli Kasargod-Staub
      Proxy season action on climate change will be hard to avoid
    • Deadline nears for P&I's survey of money managers
      A Wells Fargo bank branch at night in Washington on Jan. 7, 2021
      Wells Fargo unit sale hailed as opportunity
      Manulife taps UBS veteran to oversee its China business
      Herman Bril
      Arabesque Asset Management chooses first CEO
    • CalSTRS adds alts investments to ESG-themed portfolio
      District of Columbia Retirement Board executive director to retire
      Police car in the city of San Antonio
      San Antonio fund terminates Lazard from emerging markets strategy
      Fresno County Employees moves $22 million between Eaton Vance funds
    • District of Columbia Retirement Board executive director to retire
      Deborah Pederson and David J. Rothenberg
      Arena hires 3 to boost global marketing of private credit strategies
      Manulife taps UBS veteran to oversee its China business
      Herman Bril
      Arabesque Asset Management chooses first CEO
    • The Charging Bull statue is covered in snow near the New York Stock Exchange on Feb. 11, 2021
      Bain: Private equity managers finish 2020 strong
      Carlyle secures $4.1 billion ESG-related credit facility
      Hamilton Lane raises $3.9 billion for fifth secondary fund
      PSG closes first Europe-focused fund at $1.5 billion
    • AEW chooses head of fund operations and debt finance
      Sebastiano Ferrante and Jocelyn de Verdelon
      PGIM Real Estate turns to staff to fill new roles
      European managers key in on specialist strategies
      Ingrid Jacobs
      Jones Lang LaSalle brings on head of diversity and inclusion
    • Jackie Walorski
      Contribution catch-up for caregivers gaining favor
      Retirement cartoon
      Hopes rising for retirement readiness in 2021
      Neal and Brady
      Retirement security could be only issue both sides accept
      David Ireland
      Sponsors returning to questions about in-plan annuities
    • COVID-19: One year in
      Charging Bull, sometimes referred to as the Wall Street Bull or the Bowling Green Bull, a bronze sculpture that stands on Broadway just north of Bowling Green in the Financial District of New York City
      Top-performing managers Q4 2020
      P&I 1,000 largest retirement plans: 2021
      Retirement in emerging markets
    • U.S. still a key market for investors
      Collected coverage of P&I's 2020 WorldPensionSummit
      Pedestrians pass a large advertisement on the Arndale Center shopping mall reading 'Act now to avoid a local lockdown' in Manchester, England
      COVID-19 puts new opportunities and risks on the agenda - WPS panelists
      Screens display stock price information over the trading floor of the NYSE Euronext exchange in Paris
      Private assets will continue to grow in portfolios – WPS panelists
  • Data
    • Research Center
    • Searches & Hires Database
    • Searches & Hires News
    • RFPs
    • Charts / Infographics
    • Sponsored Research
    • Trackers
    • Q2 2020 searches and hires overview report
      Q2 2020 money manager M&A activity summary
      Q2 2020 legal overview report
      Q1 2020 searches and hires overview report
    • Louisiana Teachers rehires Mondrian as small-cap manager
      University of Louisville taps Cammack as DC plans consultant
      Cook County allocates $50 million to Mesirow funds
      South Carolina earmarks up to $355 million to 6 funds
    • Louisiana Teachers rehires Mondrian as small-cap manager
      University of Louisville taps Cammack as DC plans consultant
      Cook County allocates $50 million to Mesirow funds
      South Carolina earmarks up to $355 million to 6 funds
    • Independent Investment Consulting Services
      Financial Auditing Services
      Actuarial Services
      Emerging Market Equity Manager Services
    • Taiwan Semiconductor’s No. 1 in the emerging markets book
      U.S. fixed-income returns post another positive year
      Nasdaq delivers an impressive year
      U.S. dollar's recent decline continues
    • Institutional Investors: Shared Expectations, Divergent Paths
      Global Investor Study 2016
      Workplace Financial Wellness
    • U.S. Endowment Returns Tracker
      Pension Fund Returns Tracker
      Earnings Tracker
      Corporate Pension Contribution Tracker
  • Insights
    • Opinion
    • White Papers
    • Industry Voices
    • Letters to the Editor
    • Partner Content
    • Publisher's Update
    • Vaccination cartoon
      Rallying to meet the ongoing COVID-19 challenge
      Tesla cartoon
      Don’t confuse wealth creation with retirement saving
      Top 1000 cartoon
      Top 1,000 retirement plans weather storm just fine
      Infrastructure cartoon
      You must go big on infrastructure, Mr. President
    • Investment Trends: Looking Ahead Across Equity Sectors
      Rethinking Market and Reference Data Management
      China is embarking on a new stage of growth
      Gold Outlook 2021
    • Sameer Shalaby
      Commentary: Why should investors care about treasury management?
      David Blitzstein
      Commentary: Without a national retirement policy, Americans face a future of pension crises
      Lawrence Cunningham
      Commentary: Gensler should keep Clayton’s pragmatic proxy adviser rules
      My-Linh Ngo
      Commentary: Pension funds and the role of the debt market in the fight against climate change
    • Writer using a typewriter
      OCIO industry needs to adopt GIPS
      Writer or journalist workplace. stock illustration
      Even as it assails China, Trump administration emulates it
      Skeptical of Main Street support for proxy adviser proposal
      Focus on manager diversity pushes asset owners’ to walk the talk
    • P&I Content Solutions
      Emerging Markets: Widening Investors' Lens
      P&I Content Solutions
      How will gold react?
      To people shaking hands
      P&I Content Solutions
      Lessons From 2020: Today’s OCIO Model Passes a Major Test of Governance
      Sponsored Content By MassMutual
      Leveraging Data to Manage Risk
    • Help us help you by supporting quality journalism
      You Must Believe in Spring
      Everything Must Change
      Tomatoes & Investments
  • Multimedia
    • Videos
    • Webinars
    • Polls
    • Slideshows
    • Charts / Infographics
    • watch video
      5:39
      The coronavirus pandemic: One year later
      watch video
      0:45
      Private funds weathered 2020 turmoil
      watch video
      0:59
      Secure choice and other retirement plans at a state level
      watch video
      3:33
      P&I 1,000 by the numbers 2021
    • Emerging Markets: Expanding Investors’ View
      2021: A Fixed Income Odyssey
      ESG Capabilities and Climate Impact Investing
      Technology is the New Oil: The Changing Nature of Emerging Markets
    • POLL: Working after the pandemic
      POLL: The year ahead for the 1,000 largest U.S. retirement funds
      POLL: The Biden administration’s economic plans
      POLL: Retirement issues in 2021
    • view gallery
      9 photos
      Coronavirus and the markets
      view gallery
      22 photos
      The 1,000 largest retirement funds: 2020
      view gallery
      10 photos
      Outlook 2020
      view gallery
      10 photos
      2019 as seen through the eyes of Roger
    • Tradewatch for Q4 2020
      Graphic: Is it time for DC plans to embrace private equity?
      By the Numbers for February 2021
      Top Performing Managers of Domestic Limited-Duration Fixed Income, 4th Quarter 2020
  • Events
    • Conferences
    • Webinars
    • Defined Contribution Spring Virtual Series
      DC Investment Lineup Virtual Series
      ESG Investing Virtual Series
      Private Markets Virtual Series
    • Emerging Markets: Expanding Investors’ View
      2021: A Fixed Income Odyssey
      ESG Capabilities and Climate Impact Investing
      Technology is the New Oil: The Changing Nature of Emerging Markets
  • Careers
  • Research Center
MENU
Breadcrumb
  1. Home
  2. Print
October 03, 1994 01:00 AM

PENSION MONEY FLOWS TO REAL ESTATEASSETS UNDER MANAGEMENT UP 2.8%

By Terry Williams
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    Spurred by the dim return prospects for stocks and bonds and an apparent turnaround in property markets, pension fund money began to flow back into real estate during the second half of 1993 and the first half of this year, according to Pensions & Investments' survey of real estate advisers.

    The total amount of tax-exempt assets under management for the top 50 real estate advisers in the P&I survey increased about 2.8%, taking into account a 4% return of the Russell-NCREIF Property Index.

    In 1994, the tax-exempt assets under management for the top 50 advisers increased to $120.4 billion, from $112.6 billion in 1993.

    Many managers realized significant increases in tax-exempt assets under management. Such gains can take several forms - through the acquisition of other real estate firms; taking over property portfolios from other real estate managers; or receiving new money from pension funds.

    As a result, the survey saw the largest movements in positions in several years.

    The largest gainers include O'Connor Group, New York; MacFarlane Partners L.P., San Francisco; Kennedy Associates, Seattle; AMB Institutional Realty Advisors, San Francisco; and Schroder Real Estate Associates, New York.

    Overall, Equitable Real Estate Investment Management remained at the top spot in the rankings with $11.4 billion of tax-exempt assets under management, a 5% increase from the year before.

    But for some real estate advisers, the aftermath of the downturn continues to linger like the shakes on the hung-over. Chicago-based JMB Institutional Realty, No. 2 in P&I's survey since 1989, dropped to 11th place in tax-exempt assets under management.

    As a result, Prudential Real Estate Investors moved up to second place with $6.7 billion of tax-exempt assets under management, a 19% increase from the year before.

    Wells Fargo Realty Advisors, San Francisco, fell 15 places to 51 from 35; L.J. Melody & Co., Houston, dropped 13 places to 34 from 21.

    Along with an apparent return of capital to real estate, the Russell-NCREIF Property Index - used by the pension real estate industry to measure performance - posted a one-year return of 4.08% for the period ended June 30. For the same period last year, the index posted a return of -3.66%.

    The 4% return was the largest in several quarters, and the index finally might be headed upward after zigzagging between positive and negative in 1993.

    According to data from Frank Russell Co., Tacoma, the index was negative from the fourth quarter of 1990 through the fourth quarter of 1992. It posted a small positive return in the fourth quarter of 1993 but went negative in the second quarter.

    The index posted a slight positive return again in the third quarter and then closed 1993 with a negative return. It has been positive during both quarters of 1994, according to Tony Fiacchi, research associate with Frank Russell.

    Among the 50 largest real estate advisers, the West still held the largest part of the portfolios, with 33.2%. That is down from last year's 37.4%, however. Investment in the South and East saw small gains, to 24.6% and 24% from 21.2% and 22.2%, respectively, while the Midwest dropped one percentage point to 18.2%.

    The mix of property types among the Top 50 didn't show any major changes. Office/commercial and retail properties comprise the largest investment areas, at 25.5% and 24%, respectively. Office/commercial is down slightly from last year's 28.5%, and retail gained slightly from 23.4%. For the first time this year, P&I broke out the assets in timber, representing 7.6% of the portfolios, and single-family housing, at 1.1%. Among other property types, multifamily housing makes up 15.5% of the portfolios vs. 13.1%; industrial properties comprise 12.6%, vs. 14.3% last year; and hotel properties are 3.4% vs. 2%.

    T. Robert Burke, principal with AMB, said he noticed a change in pension funds' attitudes to real estate in mid-1993.

    "The industry was very slow up to mid-1993," Mr. Burke said. The outlook for stocks and bonds lowered and real estate started to pull out of its down cycle, he said.

    "Suddenly there was a noticeable change in people's mood."

    AMB's tax-exempt assets under management grew 78% during the year ended June 30.

    Mr. Burke said some of that increase included deals negotiated in late 1992 and early 1993 but not closed until later in 1993.

    He attributed the growth in the company's tax-exempt assets to the taking over of portfolios from other managers and an increase in acquisition activity for the firm's separate account clients.

    Among the takeover business the firm picked up was a $30 million property portfolio for the $2.2 billion Board of Pensions & Retirement for the City of Philadelphia. MacFarlane Realty Advisors had been the manager.

    AMB stands to pick up additional assets as the city of Philadelphia negotiates with its co-investors - the $2 billion Detroit General Retirement System and the $2.1 billion Detroit Police & Fire Retirement System - to take properties in lieu of cash from a troubled portfolio managed by MIG Realty Advisors, West Palm Beach, Fla.

    O'Connor Group's tax-exempt assets under management increased more than 200%, largely on the strength of its acquisition of the asset management business of Eastdil Realty Inc.

    According to Nancy Lashine, senior vice president, the acquisition of Eastdil's asset management business added $2 billion to O'Connor's assets under management. The portfolio was composed primarily of office and industrial properties.

    The firm also formed Argo Partnership L.P. a joint venture with J.P. Morgan & Co., which Ms. Lashine claims has several institutional investors which she declined to identify. The partnership, which makes opportunistic investments, added $500 million in assets under management to O'Connor Group, according to Ms. Lashine. O'Connor vaulted to fourth place this year from 20th.

    MacFarlane, meanwhile, jumped to 20th place in P&I's survey when it acquired Mellon/ McMahan Real Estate Advisors Inc. in April. The new firm now has $2 billion under management. Its predecessor, MacFarlane Realty Advisors, had $300 million under management at the time of the acquisition.

    Schroder Real Estate Associates' tax-exempt assets grew 75%, to about $1.1 billion as of June 30 from $624 million a year earlier. John Emmanuel, senior vice president, said the fund took in a combined $436 million for a commingled equity fund, two separate accounts and a commingled separate account fund.

    "It's been a tough couple of years, but the last one was a good one," said Mr. Emmanuel. "What we didn't get the last few years, we got last year."

    Kennedy Associates also showed a significant gain in tax-exempt assets under management, growing about 45% from a little more than $1 billion under management to $1.5 billion.

    Three new clients - the $77 billion California Public Employees' Retirement System, the $41 billion New York State Teachers' Retirement System and the $830 million Dallas Police & Fire Pension Fund - made up the bulk of the increase.

    JMB Institutional Realty's tax-exempt assets under management declined 48%, dropping to $4.1 billion from $8 billion. According to William Ramseyer, managing director, the decline was attributable entirely to the firm's removal of Cadillac Fairview Inc. as an asset it managed for its pension fund clients.

    Throughout the first half of this year, pension funds that invested in the 1988 takeover of the troubled Canadian property company sold their convertible debt, some at discounts as low as 20 cents on the dollar. Few of the approximately 40 pension funds remain as investors, according to sources.

    Ironically, it was the Cadillac Fairview deal that catapulted JMB into the top echelons of the P&I survey in 1988.

    According to Mr. Ramseyer, excluding Cadillac Fairview, JMB's tax-exempt assets under management actually increased, primarily because of increased separate account business.

    According to Carol Spillman, marketing officer, the Wells Fargo Realty Equity Fund had been in a liquidation phase during the past two to three years and was finally able to meet withdrawal requests of about $100 million. The fund now has assets of about $110 million.

    Also, a separate account with a public pension fund she wouldn't identify, which represented $300 million to $400 million at the "commitment level," decided to change managers, according to Ms. Spillman.

    The decrease in tax-exempt assets under management appears significant because Wells Fargo had a lot of commitments and then activity slowed, Ms. Spillman said.

    L.J. Melody & Co. lost almost 45% of its tax-exempt assets under management, dropping to $497 million as of June 30 from $907 million the year before.

    Representatives from the firm were unavailable for comment.

    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    Citadel's Ken Griffin gives $125 million to Chicago museum; name will change
    Citadel's Ken Griffin gives $125 million to Chicago museum; name will change
    Gender diversity is improving on FTSE 350 boards
    Gender diversity is improving on FTSE 350 boards
    Emerging Markets: Widening Investors' Lens
    Sponsored Content: Emerging Markets: Widening Investors' Lens
    sponsored
    Events
     
     
    Sponsored
    White Papers
    Rethinking Market and Reference Data Management
    Investment Trends: Looking Ahead Across Equity Sectors
    China is embarking on a new stage of growth
    Gold Outlook 2021
    Shifting DC Times - Winter 2021
    GP-LED OPPORTUNITIES AT THE SMALLER END OF THE MARKET
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    pilogo-NEW
    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    150 N. Michigan Ave.
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • NEWS
      • Asset owners and the coronavirus
      • Alternatives
      • Consultants
      • Coronavirus
      • Defined Contribution
      • ESG
      • Frontlines
      • Hedge Funds
      • Investing / Portfolio Strategies
      • Money Management
      • Pension Funds
      • People Moves
      • Private Equity
      • Real Estate
      • Searches & Hires News
      • SECURE Act
      • Special Reports
      • WorldPensionSummit
    • Data
      • Research Center
      • Searches & Hires Database
      • Searches & Hires News
      • RFPs
      • Charts / Infographics
      • Sponsored Research
      • Trackers
    • Insights
      • Opinion
      • White Papers
      • Industry Voices
      • Letters to the Editor
      • Partner Content
      • Publisher's Update
    • Multimedia
      • Videos
      • Webinars
      • Polls
      • Slideshows
      • Charts / Infographics
    • Events
      • Conferences
      • Webinars
    • Careers
    • Research Center