Massachusetts-based real estate investors represent a moderate proportion of the real estate institutional investor universe, with an average allocation to the asset class of $142mn among the 146 investors based in the area that are tracked on Preqin’s Real Estate Online service.
At 42%, public pension funds represent the largest proportion of Massachusetts-based investors. Endowment plans account for 15%, while foundations represent 14% and wealth managers constitute 12% of investors in this state. Private sector pension funds account for just 8% of all real estate investors that are based in Massachusetts.
Concerning allocations to real estate, Preqin’s data shows a significant upward proportional investor shift from actual allocation. Fifty-five percent of Massachusetts-based investors have a current allocation of 7.4% or less, however 69% have a target allocation of 7.5% or more. Furthermore, 22% of Massachusetts-based investors have a current allocation of 10-14.9% but 46% have a target allocation within this band. As such, these investors look set to be an important source of capital for fund managers going forward, as they look to move towards their target allocations.
When considering fund strategies targeted, Massachusetts-based investors show themselves as having a more diversified appetite towards private real estate in comparison to all other US-based investors. This is most true for value added strategies; 76% of investors in the state target this strategy as opposed to 42% of US-wide investors. In addition, with 54% of Massachusetts-based investors targeting opportunistic strategies, it is evident that these investors will be more willing to invest higher up the risk curve going forward when compared to the 38% of US-wide investors that target this strategy type.