Strong fundraising combined with property sales in the early part of 2019 lifted managers' worldwide real estate assets under management to $1.59 trillion in the year ended June 30, a 7.2% increase from the prior period.
That total might have been higher, but a short-lived capital markets downturn in the fourth quarter of 2018 and slower global economic growth applied the brakes to global real estate AUM after an 11.5% advance in the prior 12-month period, according to Pensions & Investments' annual survey of real estate managers.
All real estate sectors rose in the year ended June 30 except timber and farmland. Worldwide debt categories grew the most, led by loan assets up 131.2% to $22.6 billion, and followed by mortgages up 11.5% to $330.4 billion, mezzanine up 9.6% to $19.2 billion and hybrid debt growing 5.7% to $27.4 billion. Worldwide real estate equity assets were up 5.8% to $1.14 trillion.
Worldwide farmland and timber assets reversed upward trends in recent years, with assets falling 15.7% to $16.2 billion and 9.3% to $32 billion, respectively.
Worldwide assets managed in real estate investment trusts dropped 9.3% to $445.9 billion.
Co-investment assets managed for global clients spiked by 40.9% to $83.8 billion and by 248.2% in the five-year period ended June 30.
"There was a lot of money raised," said Nancy I. Lashine, New York-based managing partner and founder of placement agent Park Madison Partners LLC. There was some appreciation of real estate assets but not as much as in prior years, she said.
For the 12 months ended June 30, the NCREIF Property index was up 6.51% and the NCREIF Open End Diversified Core Equity index returned 4.14%.
With most real estate assets still at lofty levels, many managers took the opportunity to sell as prices began to flatten or, some cases, began to trend down, Ms. Lashine said.
"Asset prices are high and if you are not realizing gains now, it could be problematic for performance," she said.