US public pension funds are favouring so-called ‘blind-pool’ real estate strategies over funds with pre-specified portfolios due to the economic uncertainty created by coronavirus pandemic.
According to industry sources, pension funds have shifted to a preference for funds with no assets when making new commitments.
In recent years, funds with seed portfolios or a pipeline of assets have been attractive to investors due to the greater visibility it gives them at the outset.
But investors are favouring blind-pool funds because they should be in a better position to take advantage of investment opportunities and existing assets could fall value in the coming months.
Funds that have already acquired properties are likely to have to contend with asset management issues and may need to be revalued.
Stockbridge, which has raised $225m (€207m) for its Value Fund V, has taken the blind-pool approach with no pre-existing assets.