New York City steps up real estate investments in 2019
New York City has released its financial report for fiscal year 2019, disclosing a year-over-year increase in real estate commitments.
According to a report by the NYC Comptroller’s Office, as of June 30, the state’s real estate program had approximately $14.8 billion in commitments to 87 current investments and 46 managers. In 2018, commitments totaled $12.7 billion.
This fiscal year, New York City’s pension funds made $2 billion in new commitments to seven funds, compared with $1.2 billion to four funds in 2018. Six of the seven funds were follow-on commitments to existing investment partners.
New York City’s primary pension funds are New York City Employees’ Retirement System, Teachers’ Retirement System of The City of New York, New York City Police Pension Fund, New York City Fire Pension Fund and the New York City Board of Education Retirement System. The pension funds collectively have 46 private real estate managers.
The real estate portfolio is diversified by geographic region and property type, with allocations to all the major sectors including residential (29.9 percent), office (25.5 percent), industrial (16.9 percent), retail (13.2 percent) and hotel (4.5 percent), as well as other commercial real estate investments (10.0 percent).
“The real estate portfolio has been focused on building a balanced, cycle resilient-portfolio taking advantage of strategies that protect the downside, that seek income-producing assets in well-located growth markets and that are following secular trends such as e-commerce, the maturing millennial segment of the population and the aging cohort of the baby boomers,” stated the report. “Despite the late stage in the cycle, attractive opportunities still exist in select markets where fundamentals remain strong. Managers have emphasized the importance of taking a measured and cautious approach to investing.”
The real estate program plans to continue to selectively identify opportunities that will complement the existing portfolio. As of June 30, New York City had a 4.5 percent ($9.4 billion) allocation to private real estate.
