Endowment Plans in Real Estate

by Sarah Unsworth

  • 07 Sep 2011
  • RE

Endowment plans are active investors in the real estate asset class and, as of September 2011, the average real estate allocation of these institutions was 6.4% of total assets. The average target allocation to real estate was 8.4% total assets.

52% of endowments who invest in real estate have total assets of less than $500 million. 21% have assets of between $500 million and $1 billion. 24% have assets under management of between $1-10 billion. Only 2% have assets over $10 billion. In terms of overall allocations to real estate, 45% have less than $20 million invested in property.  24% have $20-49 million invested, and 26% have real estate portfolios worth between $50-250 million. 5% have real estate portfolios worth over $250 million.

The most favoured fund strategies are value added and opportunistic, with 69% and 63% of endowments committing to these vehicles respectively. Debt and distressed funds have also grown in prominence, with investors looking to take advantage of the opportunities created in a dislocated market, and 35% and 34% of endowments have a preference for such vehicles respectively. Lower-risk core and core-plus funds are also attractive to these investors, with 23% and 17% showing an interest in such strategies respectively. 20% of endowments are interested in funds of funds. In terms of geography, 89% of endowments active in real estate invest in North America. 69% are interested in European markets and 29% in Asia and Rest of World-focused funds.


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