DCREC SURVEY OF REAL ESTATE INVESTMENT MANAGERS FINDS $18 BILLION AND ACCELERATING GROWTH IN DAILY VALUED PRIVATE REAL ESTATE HELD IN DEFINED CONTRIBUTION PLANS
Eight managers have DC-friendly products in the market, four others launching private real estate options in the near future NEW YORK, (March 22, 2016) – In a survey of 14 investment managers that collectively have more than $2.5 trillion in assets under management, the Defined Contribution Real Estate Council (DCREC) found growing interest in offering private, commercial real estate investment strategies to defined contribution (DC) plan sponsors, with eight managers having at least one product in the market, and four others anticipating launching such private real estate strategies in the near future.
Daily valued private real estate funds managed by the eight responding firms have now grown to $32 billion, with more than$18 billion attributable to defined contribution. Of the $18 billion, approximately 11 percent was allocated to public REITs, and 4.6 percent was allocated to other liquid assets, the survey found. “Typically, these strategies allocate 75-85% to private real estate and 15- 25% to real estate securities and cash to provide the requisite operational liquidity to DC Plans,” said John Payne, DCREC Co-President.
The DCREC survey was completed in the second quarter of 2015. The Council anticipates using this initial survey as a baseline and will conduct the survey on an annual basis going forward.
“The goal of the survey is to give plan sponsors, consultants, and target date fund glide path managers access to information on the depth and breadth of available, DC-friendly investment strategies offering access to private, commercial real estate,” Payne said. “Defined Benefit plans have long capitalized on the diversification benefits of private real estate allocations, and with this survey, we can better understand the magnitude of interest in the DC system and measure the pace of growth going forward.”
“Based on the survey data, DC plan sponsors and consultants can now have confidence that this market has credible scale backed by multiple, competitive offerings that have been successfully implemented,” Payne added. “DC plan fiduciaries considering adding real estate as a diversifying asset class within the rapidly growing segment of professionally managed DC solutions can do so knowing that the market will support them.”
Survey results are available on the DCREC website under research: www.dcrec.org/research
About the Defined Contribution Real Estate Council (DCREC) The Defined Contribution Real Estate Council was formed in 2012 to promote the inclusion of investments in direct commercial real estate and real estate securities, including REITs, within defined contribution plans. Its goal is to improve participant outcomes by furthering education about, advocacy for, and best practices of such investments.
Members include many of the leading providers of real estate investment products to the defined contribution marketplace. Total membership has grown from 10 to 26 firms since its launch.
More information can found be at www.dcrec.org
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