In the 12 months ended June 30, REITs had net inflows of $10 billion, according to Green Street.
This year's largest manager of REIT assets, BlackRock Inc., saw those assets grow 21% to $115.5 billion in the survey period. Vanguard Group Inc.'s REIT assets grew 36% to $64.7 billion, while Cohen & Steers Inc. ranked third with $40.3 billion, up 12.5%.
The growth in BlackRock's REIT assets was due to a combination of factors including appreciation, new investment by institutional investors and inflows from generalist index managers, said Sherry Rexroad, a New York-based managing director and co-global chief investment officer for the firm's global real estate securities group.
Ms. Rexroad estimated that $300 million to $400 million of total inflows was raised from U.S. tax-exempt institutional investors.
BlackRock's REIT assets managed for U.S. institutional tax-exempt clients rose 31% to $42.5 billion.
Cohen & Steers experienced good organic growth overall, “which is unique in our asset class,” noted Jason Yablon, a New York-based senior vice president and global portfolio manager at Cohen & Steers. “A lot of peers are losing market share from (exchange-traded funds).”
Cohen & Steers' REIT assets managed for U.S. institutional tax-exempt investors rose 3% to $3.9 billion.
A change in the Global Industry Classification Standard, which forms the basis of S&P Dow Jones Indices and MSCI Inc. stock indexes, separated REITs from the financial sector for the first time. The breakout occurred in August and September.
“GICs was responsible for highlighting where managers were underweight to the real estate sector. ... The change has been anticipated for the last two years. It received a lot of attention in Q1 and Q2 of this year,” Ms. Rexroad said.
It's hard to pinpoint the exact inflows and outflows that came from the GICS change, “but the acceptance of the sector is a net positive,” she said.
“The U.S. REIT market had a very strong July. Brexit caused a flight to (U.S.) safety and drove prices higher, but the GICs changes are more than coincidental and contributed to the positive price movement,” Ms. Rexroad said.
Mr. Lachance said it is too early to tell whether the GICS change had an impact on net inflows into REITs.
“Long term, generalist portfolio managers will be more aware of underweighting real estate stocks. An underweight will be obvious now that real estate is a separate sector and they will have to explain why,” Ms. Rexroad said.