2. 22
ALTERNATIVES
State Street 2013 Alternative Fund Manager Study
• In July 2013, State Street conducted a survey of 391 leading alternative asset managers in
collaboration with Preqin, a leading source of data and intelligence for the alternative fund industry. Of
these, 57 were from the real estate sector.
• Managers provided their insights on current challenges, priorities and opportunities across the
industry, as well as their predictions for the future.
About the Research
2
54%
30%
14%
2%
Real Estate Respondents by Location
North America
Europe
Asia Pacific
Other
3. 33
ALTERNATIVES
Drivers of Change
Real estate managers view investors’ demands for increased transparency and greater control of assets
as the greatest drivers of change in the industry today.
Source: State Street 2013 Alternative Fund Manager Survey
51%
40%
35%
32%
30%
0% 10% 20% 30% 40% 50% 60%
Investor demand for greater transparency
around risk and performance
Investor demand for greater control of assets
Increased manager competition for limited pool of assets
Investor demand for more favorable fees
Investor demand for greater liquidity at fund level
Top Five Drivers of Change in the Real Estate Sector
Note: Respondents could select up to three answers. Only the top five responses are shown.
4. 44
ALTERNATIVES
Evolving Strategies Create Competitive Edge
Real estate managers are poised to expand their business over the next five years by
adding investment strategies and expanding into new regions.
35%
30%
26%
26%
16%
11%
7%
25%
14%
16%
33%
32%
9%
12%
Enter joint ventures with investors
Change fee structure
Offer managed accounts
Add new investment strategies with in-house resources
Expand into new regions
Offer funds with shorter lifespans
Add new investment strategies by acquiring another business
Product and Investment Changes Made by Real Estate Managers
Since 2008 or Planned by 2018
Introduced this change since 2008 Plan to introduce this change over next five years
Source: State Street 2013 Alternative Fund Manager Survey
5. 55
ALTERNATIVES
Operational Excellence With a Spotlight on Risk
Real estate managers have reached a place of relative stability
after having made major operational and risk changes in the wake of the financial crisis.
51%
51%
42%
19%
16%
11%
18%
9%
14%
14%
Reduce amount of leverage we employ
Report more information to investors on holdings, risk and
performance
Report more frequently to investors on our investment holdings
Purchase or license software to upgrade investment ops technology
Use new techniques to assess performance & risk relative to peers
Risk and Operational Changes Made by Real Estate Managers
Since 2008 or Planned by 2018
Introduced this change since 2008 Plan to introduce this change over next five years
Source: State Street 2013 Alternative Fund Manager Survey
6. 66
ALTERNATIVES
Challenges for the Future
Fundraising is the top concern for real estate managers as they face fierce competition for investor capital.
Source: State Street 2013 Alternative Fund Manager Survey
82%
54%
38%
20%
18%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Fundraising
Generating performance
Adapting to regulation
Preserving margins
Fulfilling investor demands
Top Five Challenges Predicted by Real Estate Managers Over Next Five Years
CORP-0853
