Infrastructure was one of the fastest growing non-credit alternative investment asset classes, up nearly 72% to $10.8 billion in the 12 months ended Dec. 31, according to Pensions & Investments' annual survey of managers of U.S. institutional, tax-exempt assets.
Managers regained the ground they lost in 2012 when infrastructure assets dropped by 10.4% to $6.3 billion, after showing annual increases every year since P&I began tracking infrastructure as of year-end 2006.
Assets in buyouts managed for U.S. institutions also exhibited double-digit growth, up 14% to $7.7 billion. (The broader category of private equity slipped 6.3% to $40.5 billion from the year-earlier survey.)
Real estate equity also increased, by 3.4% to $293.99 billion for the year ended Dec. 31.
The 25 largest managers of equity real estate account for 86% of the total real estate equity assets reported in 2013, compared with 84% of all real estate equity assets the year before. The largest 25 fared a bit better than the entire group, with their combined real estate equity assets up 5% to $252 billion at year-end 2013.
Within the real estate equity category, domestic assets among the largest 25 managers grew 8% to $229.6 billion while international real estate fell 31% to $17.6 billion.
Meanwhile, the 25 largest real estate equity managers are finding success with timber. Overall, timber assets dropped 6% to $15.5 billion in 2013. But timber assets managed by the top 25 grew by 4% to $4.7 billion during the same time period.
By comparison, the NCREIF Property index rolling four-quarter total return was 10.98%, divided between 5.61% of income and appreciation of 5.16%. The NCREIF Timberland index rolling four-quarter return was 9.69%. The income portion was 2.8% and appreciation was 6.75%.
Real estate investment trust assets grew 6% to $64.7 billion; the total of the largest 25 managers of REIT assets for U.S. institutional clients was up 6% to $62.1 billion. The FTSE NAREIT All-Equity REITs index had a total return of 2.86% for the year ended Dec. 31.
P&I's data on the individual asset classes and strategies are based on assets managed internally for U.S. institutional tax-exempt investors as of Dec. 31.
Once again, J.P Morgan Asset Management topped the lists in both infrastructure and real estate equity. The firm's infrastructure assets grew nearly 5% to $2.6 billion during 2013. During the same period, the firm's total real estate equity assets were up 15% to nearly $30 billion. Most of those assets were domestic real estate, which grew 16% to $29.5 billion, while international real estate equity assets dropped by 23% to $431 million.
“International funds raised a long time ago (are) liquidating (as they come to the end of their lifecycle) and investors were not terribly interested” in international real estate, said Joseph Azelby, managing director at J.P. Morgan Asset Management in New York, where he is head of the firm's global real assets group.