REAL ESTATE

Real Estate AUM rises 11.48%

Total worldwide real estate assets under management rose to $1.48 trillion as of June 30, 2018, up 11.48% from $1.32 trillion reported a year earlier, according to Pensions & Investments' annual survey of real estate managers. Based on Pensions & Investments' historical data, worldwide real estate AUM shrank by 32% during the subprime mortgage crisis, dipping to $683.9 billion in 2010, and re-surpassed the $1 trillion mark in 2014.

In 2018, the five largest managers in total represented approximately 32% of the worldwide AUM. Nuveen ranked first among the largest real estate managers with $114.4 billion in worldwide real estate AUM, followed by MetLife Investment Management, PGIM, CBRE Global Investors and UBS Asset Management Real Estate & Private Markets.

Nuveen replaced DWS Real Estate in the top five list in 2012, and AUM rankings among those leaders changed only slightly every year since 2012.

Nuveen was acquired by TIAA-CREF in 2014, the largest transaction in the asset management business since 2009, and TH Real Estate was formed the same year. TH Real Estate, a Nuveen company that reflects TIAA-CREF's real estate business, grew its assets significantly to $97 billion through the acquisition of Henderson Global Investors in 2015. In addition to its specialty in real estate equity investing, Nuveen also is considered a top farmland and mezzanine real estate manager by worldwide assets under management.

PGIM's worldwide real estate AUM rose to $106.5 billion in 2018, a 49% increase from $71.3 billion in 2008. Clarion Partners, used to be the largest manager with $150.2 billion worldwide real estate AUM in 2008, shrank its assets to $32.7 billion in 2018. Clarion Partners went independent in 2011 after its spinoff from Dutch bank ING.

Based on Pensions & Investments' 2018 real estate manager survey, 22% of worldwide real estate AUM comes from government retirement plans, 21% from non-government retirement plans, 9% from non-affiliated insurance companies, 6% from sovereign wealth funds, 3% from endowments and foundations, and 1% from family office. The rest was mostly from central banks, high-net-worth individuals and funds of funds.

Real estate equity accounted for 72.8% of total worldwide real estate AUM in 2018, followed by 20.8% in mortgages, 2.4% in timber, 1.3% in farmland, 1.2% in mezzanine, 0.71% in hybrid debts and 0.24% in loans. Real estate equity AUM rose by 19% to $1.07 trillion in 2018, followed by mortgage AUM growth of 6.6%, timber at 10.7%, farmland with 2.8% and mezzanine, 10%. Though only a small portion of worldwide assets were managed in hybrid debts and loans, hybrid debt AUM grew by 48.2% and loans grew by 216.6% in 2018.

CBRE Global Investors topped the list of real estate equity managers in 2018, with 99.9% of its $73.9 billion of worldwide real estate assets managed in equity. Nuveen ranked second with $66.5 billion, followed by UBS Asset Management Real Estate & Private Markets, with $65.2 billion. Fifty-one of the 88 largest real estate managers have more than 90% of their worldwide assets managed in real estate equity, with 41 of those managers specializing exclusively in equity in 2018.

MetLife Investment Management was ranked first by mortgage assets under management, with $91.7 billion worldwide assets. PGIM was in the second place with mortgage AUM of $56.7 billion, followed by Nuveen with assets of $30.3 billion. Prime Capital Advisors LLC and Union Labor Life Insurance Co. are the only two real estate managers with 100% of their worldwide assets managed in mortgages.

Amalgamated Bank used to manage assets exclusively in mortgages before 2014, but due to mortgage fund closures and a workout situation, it gradually shifted its business focus until reaching 100% equity management in 2018.

Updated data can be found here in the P&I Research Center.