Preqin’s Real Estate Online service currently tracks 298 New York-based institutional investors that invest or are considering investing in private real estate. These investors allocate an average of 5.5% of their total assets to real estate, below their average target allocation of 7.2%, indicating capital flows to the asset class in the mid-to-long term. New York-based private real estate investors represent 11% of the US-based real estate investor population; however, they represent 35% of the total assets under management (AUM) for the country, with approximately $9tn in assets.
New York-based LPs have a stronger preference for higher risk private real estate funds than lower risk strategies; opportunistic, value-added and real estate investment strategies are a preference for 64% and 63% of investors respectively, while lower risk strategies such as core and core-plus are targeted by only 37% and 28%, respectively.
One of the largest New York-based real estate investors in terms of AUM is New York State Common Retirement Fund. The public pension fund has just over $180bn in AUM, with 5% of this allocated to real estate, just below its 6% target allocation. It accesses the asset class through a mixture of direct, listed and private real estate and is considering further private real estate investment over 2015.
Another large investor in the city is MTA New York City Transit Authority Pension Fund. This private sector pension fund has approximately $27bn in AUM, investing 2% of this solely in private real estate funds. The private pension fund’s two most recent private real estate investments were directed towards a core fund and a distressed fund of funds.