Blackstone Loses Crown as World’s Largest Real Estate Manager

Brookfield Asset Management has edged out Blackstone to become the world’s largest real estate manager with $113 billion under management, according to a combined industry group survey.

The two property giants have passed the crown several times, with Blackstone in first place at the close of 2013 and Brookfield winning the year prior.

Total real estate assets held by fund managers hit just shy of $2 trillion as of December 31, 2014, according to data compiled by INREV, the European Association for Investors in Non-Listed Real Estate Vehicles.

“This survey clearly reflects the continuing domination of the large players and an enduring trend for consolidation,” said Henri Vuong, INREV’s research and market information director. “It’s a trend that’s been driven by the economies of scale, or the desires to tap into new markets and expertise, and it’s one that is likely to accelerate rather than unwind in the immediate future.”

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Institutions accounted for the lion’s share (85%) of capital flowing to these real estate giants, with retail (9%) and co-investment managers (5%) making up the balance.

Inrev Source: INREV/ANREV/NCREIF Fund Manager Survey 2015

Pension funds, however, have dialed back their involvement in the sector substantially since last year’s survey. At the close of 2014, retirement systems contributed 42.8% of invested real estate assets, down from 50.4% the year prior.

Where pensions have fallen off, insurance companies have more than made up the difference. INREV’s data showed a nearly five-fold increase in insurer’s share of real estate investments year-on-year, climbing from 3% to more than 14%.

High-net worth individuals and funds-of-funds have likewise boosted their allocations, according to the survey.

INREV’s analysts noted the increasing diversity in both sources of institutional capital the products on offer—two trends that Vuong predicted to continue apace into next year.

Northern Trust has spun out its hedge fund and private equity business under the new moniker 50 South Capital Advisors, the firm announced Monday.

The infant boutique retains close ties to its corporate parent via existing clients, ownership (Northern Trust owns 100% of the company), and location. 50 South—a nod to Northern Trust’s headquarters at 50 South LaSalle Street in Chicago—has inherited $3 billion in client capital under management and $1.3 billion on which to advise.

“Investors will benefit from a highly motivated and aligned investment team at 50 South Capital, coupled with the resources and global network of Northern Trust.” —Robert MorganRobert Morgan, appointed head of the original alternatives unit in 2011, has likewise maintained his role through the transition. A former director at local private equity fund Frye-Louis Capital, Morgan now leads 50 South’s investment operations as managing director.

The entire Northern Trust alternatives team has transitioned to join Morgan at the new entity, according to the parent company.

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“Investors will benefit from a highly motivated and aligned investment team at 50 South Capital, coupled with the resources and global network of Northern Trust,” Morgan said.

Like its progenitor, 50 South Capital will specialize in private equity and hedge funds-of-funds, although a spokesperson would only refer to this product line as “multi-manager solutions.”

The boutique also advises on custom portfolios and has the capacity to serve as outsourced-CIO for institutions’ entire alternatives buckets.

Stephen Potter, president of Northern Trust Asset Management, called the launch of 50 South “a milestone” for the 125-year-old financial giant.