Endowment plans are active investors in real estate and as of July 2010, the average real estate allocation of these institutions is $120 million. The average target allocation to real estate is $179 million.
45% of endowments that invest in real estate have total assets of less than $500 million, 20% have between $500 million and $999 million and 32% have $1-9.9 billion. Only 3% of endowments in the asset class have assets under management of over $10 billion. In terms of allocations to real estate, 41% have less than $20 million allocated to the asset class, 20% have $20-49 million, and 32% have $50-250 million. 7% have over $250 million allocated to real estate.
The most favoured fund strategies are opportunistic and value added, with 69% and 68% of endowments targeting such vehicles respectively. Debt and distressed funds have grown in prominence, with investors looking to take advantage of the opportunities created in a dislocated market, and 42% and 38% of endowments have a preference for such vehicles respectively. Lower-risk core and core-plus funds have also garnered increased investor interest with 24% and 15% of investors showing an interest in such strategies respectively. 16% of endowments are interested in fund of funds vehicles. In terms of geographic preferences of the endowments active in real estate, 88% invest in North America, 60% in Europe and 43% in Asia and Rest of World.
For more information on private equity real estate funds, fundraising, fund managers and investors, click to see how Preqin’s Real Estate Online can assist you.