Both mortgages and core real estate have an income component. Core real estate also has the added potential for capital appreciation, Mr. Smith explained.
Philip J. McAndrews, managing director and head of global real estate transactions and joint ventures at New York-based TIAA-CREF, said that mortgages was an area of growth over the 12-month period in addition to equity real estate acquisitions. TIAA-CREF's U.S. institutional tax-exempt assets increased by 6.6% to $36 billion during the period.
TIAA-CREF's real estate investment business grew in most areas during the survey period, including increased equity real estate acquisitions and an upturn in mezzanine financing, Mr. McAndrews said.
“Across the board, we are back in business in a very full way,” Mr. McAndrews said. “The pricing on the debt side is compelling. We see good values as a mortgage lender and equity investor in real estate.”
J.P. Morgan Asset Management was in the third slot for real estate assets managed for U.S. institutional tax-exempt clients, up 15% to $32.6 billion, and in fifth for worldwide assets, rising 12.45% to $37.6 billion.
“Assets under management increases have been driven by continued strong client inflows as well as significant appreciation in the underlying asset base. Clients have been increasing their allocations to real assets in general and real estate specifically in the face of lower fixed-income yields,” said Kevin Fax-on, New York-based managing director and head of real estate Americas, J.P. Morgan Asset Management, in an e-mail.
J.P. Morgan also has queues for its open-end funds, ranging from 4% to 7% of net asset value, Mr. Faxon said.
“We view queues in this range as "normalized,' allowing clients' funds generally to be drawn within four to six months of making a commitment,” Mr. Faxon wrote.
“We started seeing investment queues in core in mid-2010 and in value-added in early 2011,” Mr. Faxon added.
CBRE Global Investors jumped to third in worldwide assets under management for the year ended June 30, from seventh, with a 114% increase in assets to $50.3 billion. Much of the increase was the result of the Los Angeles-based real estate manager's acquisition of portions of the non-U.S. portion of ING Group NV's real estate investment management business. The acquisition included global direct real estate in Europe and Asia, and also global real estate securities and funds of funds, said Michael K. McMenomy, global head of investor services. The deal closed July 1, 2011, missing P&I's cutoff for last year's survey by a day.
CBRE Global's institutional tax-exempt assets grew by 4% to $8.1 billion. These assets are mostly based in the U.S. and were not part of the ING acquisition.
Mr. McMenomy said that absent the ING merger, the firm's growth in assets came from raising and investing capital. “The market was offering a little bit of something for everybody,” Mr. McMenomy said.
There were deals in core real estate, especially in so-called gateway cities, such as San Francisco, New York, Washington and Los Angeles, as well as investment opportunities in other, less prime, assets providing property owners with capital to improve properties, Mr. McMenomy said. “It was one of those periods of time where there was an opportunity for all risk-styled investor capital,” he said.