REITs Seek to Lure U.S. Pension-Fund Money From Private Equity
U.S. real estate investment trusts are seeking a bigger piece of the more than $500 billion of property investments from pensions, aiming to attract money from the private-equity funds traditionally favored by managers.
The National Association of REITs found that a portfolio 30 percent invested in commercial property shares delivered a higher return relative to one more heavily tilted toward private-equity funds, based on a study to be published today on the group’s website. Pension funds typically put less than 10 percent of their real estate allocations into publicly traded REITs to protect against stock-market volatility.
The Washington-based real estate association, which represents about 200 companies, says that what it calls “the REIT third” can help state and corporate pensions narrow a funding shortfall that totals almost $1.5 trillion, according to the Center for Retirement Research at Boston College. A bigger REIT allocation, and a smaller one in private equity, would offer better diversification and more consistent returns, said Brad Case, NAREIT’s vice president for research.
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Posted on Mon, February 7, 2011