As a group, endowments are struggling to achieve the heady returns of just a few years ago. While pension funds and insurers have their beneficiaries, endowments are all about supporting the ongoing operation of their respective colleges and universities. With university spending rates increasing rapidly, jumping 4.6% in 2011 alone, endowments need annual returns of 8% to 10% just to keep pace with these increases, plus inflation. That scenario kicks up the pressure on them to perform.

Thankfully, 2011 was a banner year for endowment growth. According to the annual study from the National Association of College and University Business Officers-Commonfund, US educational endowment assets grew 17.9% in the fiscal year ended June 30 to $408.1 billion.

Yale University, which ranked second behind Harvard in the study, with $19.4 billion in total assets, grew its asset base by 16.3% in 2011. University of Texas System in Austin moved up to third place from fourth with asset growth of 22% to $17.1 billion, just ahead of Princeton University, which had $17.1 billion in assets, and Stanford University, in fifth place with assets of $16.5 billion, reflecting growth of 19.1%.

As an overall barometer for the group, HMC, under president and CEO Jane Mendillo, is quite bullish on real estate. In 2009, it hired Daniel W. Cummings, a former managing director at private equity shop the Carlyle Group, as managing director of real estate investments. That move has led to the development of a number of joint ventures and investments in new pockets in the global real estate market.

When it comes to investment strategy, endowments typically favor the opportunistic and value-add sectors. Still, the need for long-term, stable returns is very much at the core of most investing strategies, and endowments have shown an increasing appetite for net-leased properties, in particular.

For example, Harvard is a lead investor in a new $1-billion venture that will buy triple-net-leased warehouses and distribution centers, along with selected retail and office properties. This strategic move underscores the hunger for yield at a time when interest rates remain at historic lows. According to sources, the fund is expected to yield 6.5% to 8%.

Smaller endowments are also on a growth trajectory and ready to step up their real estate investments. Forbes recently ranked the fastest-growing endowments from the NACUBO study, and the University of Virginia topped the list with a 28.4% increase in its assets from 2010 to 2011, followed by the University of Pittsburgh, with a 24.3% jump, and Purdue University, which grew 22.6%.

In fact, the $5.4-billion UVIMCO more than doubled its real estate allocation over the past four years. Real estate represented just 2.7% of the total portfolio in 2007 but grew to 5.9% in 2011. That still pales in comparison to the private and public equity allocations of about 20% each in 2011. UVIMCO's typical target is to place 5% to 10% of its long-term pool in real estate.

Given these dynamics, as long-term investors, endowments continue to find real estate a viable means to a much-needed end, especially when it comes to adding portfolio diversification while driving steady yields over long time horizons