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Real Estate Strategies Targeted by US-Based Foundations and Endowment Plans – May 2015

by Brian Chung

  • 13 May 2015
  • RE

Preqin’s Real Estate Online currently tracks 857 US-based foundations and endowment plans investing in the real estate asset class through private real estate funds. These institutions have aggregate assets under management of more than $988mn, and on average, currently allocate approximately 6% to real estate, below their average target allocation of 7%.

US-based foundations and endowment plans play significant roles in the private real estate fund market as they currently allocate more than $52bn to the asset class. As the chart above shows, larger proportions of US-based foundations and endowment plans are targeting higher risk strategies than lower risk core and core-plus strategies, with value added vehicles the most favoured strategy among these investors.

Over the next 12 months, US-based foundations and endowment plans will consider a variety of regions when committing capital to private real estate funds. Eighty-three percent of these investors will commit capital to North America-focused vehicles and 50% will be targeting funds investing throughout Europe. Additionally, Asia-focused funds and emerging market-focused funds are targeted by 39% of these investors and 36% will gain exposure through emerging market economies.

One such example of a US-based endowment plan investing in private real estate in the next 12 months is Carleton College Endowment, an $800mn endowment plan based in Minneapolis, Minnesota. The endowment plan will commit $20mn across three to five private real estate funds, opportunistic or value added vehicles on a global basis. It currently allocates 3% of its total assets to real estate and does not maintain a target allocation to the asset class.

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