Salary increases for real estate pension fund executives this year are expected to remain constant at 3%, while pension fund real estate advisers can expect a 4.5% salary increase, more than the 3.5% rise in 1994, according to FPL Associates, a Chicago-based consulting firm.
FPL examined 10 industry segments and 1,500 companies and concluded the average salary increase in 1995 will be 4%, the lowest in a decade. The low increase occurs at a time when demand for real estate professionals is rising.
"Uncertainty in the real estate industry has tended to control base salaries while emphasizing annual performance bonuses as part of the overall compensation for executives," said Carl Bruno, a managing director with FPL. "One reason for this may be an attempt on the part of the companies to link executive pay more closely to specific performance measures within the industry."
The investment banking industry was the only industry segment expected to show an increase greater than 5%. According to FPL, real estate investment bankers will receive a 5% salary increase this year.
The other segments included in the survey were: real estate investment trusts, home builders, commercial mortgage banks, residential mortgage banks, commercial banks, insurance companies, developers and corporations.
Although their salary increases will be modest, pension fund real estate executives are expected to earn an annual bonus of 20% of salary in 1995, according to the survey.
Within the pension fund real estate universe, chief real estate investment managers will earn between $75,000 and $130,000 with a 15% bonus; asset managers will earn between $55,000 and $100,000 and a bonus of 10%; and acquisition and disposition managers will earn between $70,000 and $110,000 and a 10% bonus.
Salaries for executives with pension fund real estate advisers range from $700,000 to $800,000 for CEOs to $125,000 to $190,000 for a researcher who has achieved partner status, the study said.