Sell Pressure Eases for Institutional Investor Real Estate Holdings

October 28, 2009 ( - Healthy equity markets in recent months have eased the pressure on institutional investors to dump core real estate holdings, a Segal Advisors researcher contends.

According to Gino Reina, Segal Advisors research director, institutional investors were reacting to sharp equity declines during 2008 and the first part of 2009 that were more rapid than real estate values. Efforts by investors to rebalance their asset allocation by liquidating part of their real estate holdings led to a “redemption queue.”

However, with Wall Street’s recovering appetite for equities that has driven the asset class up 20% to 25% thus far in 2009, Reina says the picture is markedly different. He said real-estate holdings are now down 30% to 40%.

Adds Reina: “Plan sponsors are saying ‘We’re not overweight on real estate anymore. The pressures related to the redemption queue as not as great.”