Ferguson Partners' commitments database revealed a 63% decrease in public pension commitments to real estate investment managers in Q1 2023 vs. the prior year. However, there are still opportunities in the market, with debt-focused vehicles receiving the largest quarterly share of commitments (12%) since Q3 2021, and emerging sectors such as healthcare, life sciences, hotels, single-family rentals, data centers, cold storage, and senior housing attracting an increased share of commitments.
Although the average commitment size in Q1 2023 increased by 29% to $145 million from the 2022 average of $113 million, capital is flowing to fewer investors. The top 20 firms raised 75% of the total volume of commitment dollars, indicating a highly competitive market. In light of these developments, investment managers should use this as an opportunity to assess their capital raising strategies and identify areas of opportunity to stand out in a challenging market environment. We help our clients get inside the mind of their investors to understand what is working, what isn’t, and where there is opportunity through our unique LP feedback study process.
To read the full Q1 commitment report and learn more about Ferguson Partners Consulting and our LP feedback study process, follow the link below, or send an email to our consulting team: