Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Retirement Income Conference
    • 2022 Managing Pension Risk & Liabilities
    • 2022 WorldPensionSummit
Breadcrumb
  1. Home
  2. INVESTING & PORTFOLIO STRATEGIES
March 09, 2015 01:00 AM

Insurers focus on joint ventures for real estate deals

As market changes, firms switch strategies to make investments

Arleen Jacobius
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Michael Moran said Allstate moved to joint ventures when investments became harder to find.

    Updated with correction

    Insurance companies continue to charge into real estate, especially joint ventures.

    Insurers pumped more than $7.7 billion into commercial real estate in the year ended Dec. 31. The biggest annual jump occurred between 2011 and 2012, when insurers' real estate investments more than doubled to $6.7 billion from $3.3 billion.

    Insurance companies had $42.7 billion invested in joint ventures as of Dec. 31, 2013, the latest data available, up from $29.2 billion in joint ventures, partnerships and limited liability companies as of Dec. 31, 2011, according to the Capital Markets Special Reports of the National Association of Insurance Commissioners and the Center for Insurance Policy and Research.

    Insurance companies are no strangers to real estate, but the financial crisis caused many to pull back and reassess their strategies. Now, they are entering into joint ventures alongside operators and other institutional investors as good deals have been harder to find.

    Just after the recession, real estate investment executives at The Allstate Corp., Northbrook, Ill., aimed to invest in what they saw as low-hanging fruit through a combination of commingled funds, direct investments and partnerships, said Michael Moran, managing director and vice president, who heads Allstate's real estate group.

    Today, real estate investment opportunities are less abundant and harder to find, so Allstate has shifted to more highly structured joint ventures and co-investments to find value, Mr. Moran said.

    Others — including TIAA-CREF, a money manager and life insurer, and The Guardian Life Insurance Co. of America, both in New York — are investing as the general partner, reaping a portion of the fee income generated as well as the returns.

    Some insurers are making direct investments in real estate.

    In February, Chinese insurer Anbang Insurance Group Co. Ltd., Beijing, bought the New York Waldorf Astoria from Hilton Worldwide Holdings for $1.95 billion, as well as the office space portion of a roughly 350,000-square-foot tower at 717 Fifth Ave. in Manhattan from The Blackstone Group.

    In 2013, Ping An Insurance Co. of China Ltd., Shenzhen, paid $388 million for the Lloyd's of London headquarters.

    Such activity probably will increase this year, said Reid McGlamery, executive vice president in the Los Angeles office of real estate money manager Jones Lang LaSalle Inc.

    TIAA-CREF is typical of companies with large insurance businesses that invest for their general account and have established money management businesses in which they invest on behalf of other asset owners.

    TIAA-CREF has about $9 billion in its general account invested in real estate. The firm has $7.6 billion in joint ventures, said Martha Peyton, managing director and head of research and strategy, global real estate in TIAA-CREF's asset management business.

    For example, TIAA-CREF has a number of joint ventures with Norges Bank Investment Management, which manages the $870 billion Oslo-based Government Pension Fund.

    “There's been a sea change that occurred post-recession and we see more money going into joint ventures with our institutional partners and clients,” said Suzan Amato, managing director, managed accounts and joint ventures, TIAA-CREF global real estate. “We at TIAA made a deliberate effort to create investment portfolios where we are the lead investor. We have done quite a lot of that, particularly in 2014.”

    TIAA-CREF invested $2.7 billion in joint ventures with institutional investors last year.

    TIAA-CREF also makes commercial real estate loans — many alongside other insurance companies — with a loan portfolio valued at more than $15.6 billion, Ms. Amato said.

    Joint ventures — both equity investments and loans — are a way for TIAA-CREF to diversify risk. TIAA-CREF has made a number of joint venture acquisitions alongside established real estate investment trust operators such as Simon Property Group Inc. and Westfield Corp., Ms. Amato said.

    This insurance company push into joint ventures and direct real estate investment is a worldwide phenomenon, which stems from insurers greatly increasing their overall real estate investments, noted Jeremy Plummer, London-based CEO of CBRE Global Investors' global investment partners business.

    Insurance companies have grown to be a significant client group for CBRE. Some $11.9 billion of its $90.6 billion in global real estate assets under management is managed on behalf of insurance companies, up from “very little” five years, Mr. Plummer said.

    Low bond market yields have been tough on insurance companies, which normally hold huge portfolios of bonds, he said. “Generally, insurance companies' appetite are skewed toward less volatility, more secure, long-term, long-duration cash flows, with low levels of leverage or zero leverage,” he said.

    Very large major shopping centers have those characteristics, which leads insurance companies into joint ventures to diversify the amount of capital invested in a single deal, he said.

    Last month, AXA Real Estate Investment Managers — on behalf of 10 insurance companies of parent company AXA Equitable Financial Services LLC — created a joint venture with property manager Eurocommercial Properties N.V., Amsterdam. Eurocommercial bought a 50% stake in a e43.3 million ($47.89 million) shopping center in France that AXA had wholly owned.

    Peter Martenson, partner and head of global distribution in the San Diego office of placement agent Eaton Partners LLC, said insurers “are taking lessons learned from the last decade to 15 years and going back to basics, back into doing joint ventures and pushing for separately managed accounts,” he said. “They are concentrating investments .... and getting closer to the assets.”

    “I think it will increase even more,” Mr. Martenson said.

    Some insurance companies are starting to invest in real estate money managers, reaping fees and returns as part of the general partner, as well as investing alongside other asset owners as part of the limited partnership.

    In January, Los Angeles-based real estate money management firm TruAmerica Multifamily acquired a 14-property multifamily portfolio for $482 million for a syndicate of domestic and international insurance companies including Guardian Life and Allstate. TruAmerica was founded in 2013 as joint venture between Robert Hart, TruAmerica's CEO, and Guardian Life.

    Guardian Life owns 80% of TruAmerica, which was formed to make value-added investments in multifamily real estate, he said.

    “We see more and more where insurance companies have a piece of the general partnership side, where before they were on the passive side.”

    Related Articles
    GSAM: Insurance CIOs more pessimistic about finding attractive investment oppor…
    Allstate CIO to retire at end of March
    Recommended for You
    More funds testing water on crypto-related assets
    More funds testing water on crypto-related assets
    Money managers eager to make leap to opportunity zone investing
    Money managers eager to make leap to opportunity zone investing
    Index investing: Not as passive as you might think
    Index investing: Not as passive as you might think
    ESG: Sustainability - Gaining Momentum
    Sponsored Content: ESG: Sustainability - Gaining Momentum

    Reader Poll

    June 6, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Nearing the finish line: Ideas on end-state investing for corporate DB plans
    The Meaning of "Portfolio Intelligence"
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Crossroads: Politics, Inflation, & Bonds
    Is there a mid-cap gap in your DC plan?
    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
    June 20, 2022 page one

    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.

    About Us

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

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    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 © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Retirement Income Conference
      • 2022 Managing Pension Risk & Liabilities
      • 2022 WorldPensionSummit