Are Pension Funds, ETFs and Mutual Funds Coming Back to CRE?

There are signs that pension funds, exchange-traded funds and mutual funds are all readying to invest in real estate again.

CoStar had a nice write-up yesterday about the interest from pension funds. The story looks at activity from the Employees Retirement System of Texas, the CPP Investment Board and the Oregon Public Employees Retirement Fund.

In the past couple of weeks, pension plans both in the United States and Canada have been showing up as buyers in trophy properties, pumping money into new investment funds and lining up joint venture investors and partners in other deals. Yet those individual deals have been trumped by the Employees Retirement System of Texas, which in the same time frame, has revealed plans to increase its commercial real estate portfolio to up to $1.7 billion from about $460 million. The increase allocation for investment is to occur over the next five years, but with the bulk of the allocation set to be spent this year and next.

Meanwhile, a piece of research from Morningstar notes that "real estate funds, bolstered by strong returns over the trailing 12 months, have gathered $1.5 billion in assets this year through April, which is the category's best start since 2007." (Emphasis added.) It also dwarfs the full-year 2009 figure, which amounted to a paltry $199 million.

All of this seems promising and perhaps the commercial real estate investment market will pick up as the year progresses.

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