Sophisticated investors have long had REITs as a portion of their real estate allocations. It’s not coincidence that as pension funds deepen their understanding of REITs, their allocations tend to increase. With the largest players in the market warming up to REITs as a stand-alone asset class, those that remain under-allocated will have to justify their lack of exposure to a sector with one of the best performance track records in all asset types over the past 20 years.
Source: National real Estate Investor | Repost Serenity Alt 12/3/2019
The $500 million wager by the California State Teachers’ Retirement System on publicly-traded REITs could spur an influx of investment by other pension funds and institutional investors into the REIT sector, experts say.
The California State Teachers’ Retirement System (CalSTRS) is the second largest U.S. pension fund, boasting an investment portfolio valued at $246 billion as of Oct. 31. When it makes portfolio moves, other investors take note. So CalSTRS’ bet on publicly-traded REITS could be a catalyst for other pension funds, says Meredith Despins, senior vice president of investment affairs and investor education at trade group Nareit.
“There is significantly more receptivity among those [funds] to hearing how REITs fit into the real estate investment equation than there has been in the 13 years I’ve been with Nareit,” Despins says.
She adds that pension funds are drawn to the REIT sector because it enables exposure to traditional property types, including office and retail, as well as to non-traditional property types like data centers. However, she adds, any shift by pension funds toward REITs won’t be swift.