Public pension funds allocated a record $41 billion to real estate last year, based on Nasdaq data that shows a move past predictions of a pandemic-induced demise for property investment.
The 59% increase last year from the prior 12 months came after a slow start, with first-quarter commitments to real estate mirroring levels seen throughout 2020. Commitment activity from public plans then spiked to $12 billion in the second quarter and remained elevated during the remainder of the year, with commit totals of $11.1 billion in the third quarter and $10.8 billion in the fourth quarter, according to the Nasdaq Private Fund Trends Report.
Prior to 2021, the last time quarterly commitments to real estate funds from public plans topped $10 billion was the third quarter of 2019. Overall, pension funds committed $34.9 billion to real estate in 2019.
“The flurry of activity from these allocators suggests that they now feel more comfortable with the outlook for real estate, which was perhaps the hardest hit private markets asset class during the height of the pandemic,” the report said.
A total of 151 public pension plans reported commitments to real estate funds in 2021, a 41% increase from the number reporting in 2020.
“All signs point to 2022 being another strong year of fundraising for real estate,” the report concluded.
The Carlyle Group was the top real estate manager in 2021 on both a reported dollar commitments and number of commitments basis, gathering $2.3 billion from 21 commitments, according to the Nasdaq data. The fund manager’s latest flagship real estate fund, Carlyle Realty Partners IX, received 14 of these allocations, more than any other real estate fund in 2021, for a total of $1.8 billion. A further $528 million flowed to Carlyle Property Investors.
Brookfield, Blackstone Investments
Canada’s Brookfield Asset Management was runner-up to Carlyle. Brookfield Strategic Real Estate Partners IV had the second-most commitments reported from public plans — 11 for a total of $1.4 billion.
Overall, the fund manager saw $1.9 billion in reported commitments, also good for second place among real estate general partners.
Just behind Brookfield in terms of reported dollar commitments in the year was Blackstone Group with just under $1.9 billion.
Public plan allocators reported commitments to five different Blackstone funds including Blackstone BioMed Life Science Real Estate and Blackstone Real Estate Partners Asia III.
The annual Nasdaq private funds report highlights top trends and commitments in private markets across private equity, private debt, real estate, real assets and secondaries.
The data in the report is sourced from Nasdaq’s eVestment Market Lens, which aggregates documents, videos and presentations from about 475 public pension plans in the United States, Canada and the United Kingdom, and from pensions’ investment consultants.
Author Credit: CoStar | Photo Credit: Getty Images