Assets invested in equity real estate by defined benefit plans in Pensions & Investments' top 200 rose 4.7%, to $106.9 billion, in the 12 months ended Sept. 30.
When adjusted for the 11.6% gain recorded by the NCREIF Property Index during the period, however, the assets invested dropped 6%. The drop reflects pension fund executives' conundrum during the year. On one hand, pension executives were selling their real estate, to take advantage of high prices and book the profits of their investments. At the same time, however, they were trying to reinvest some of that money, and the rest of their uninvested allocations, into the asset class.
Investments among the top 200 plan sponsors in real estate investment trusts saw a much larger percentage gain — 29.5%, to $19.3 billion — reflecting market appreciation and a growing use of REITs as part of institutional investors' real estate allocations, analysts said. On a market-adjusted basis, the assets in REITs increased 3.2%.
Mortgage portfolios of the defined benefit plans in the top 200 grew 20.8% to $40 billion.
The California Public Employees' Retirement System, Sacramento, continued to hold the most equity real estate, with $11.9 billion as of Sept. 30 coCalifornia State Teachers' Retirement Systeme California State Teachers' Retirement System, also in Sacramento, retained second place in the rankings, with $5.4 billion, compared with $4.7 billion a year earlier.
General Motors Corp., Detroit, was third overall and tops among corporate pension plans with $4.9 billion, up from $4.5 billion in 2003.