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Harvard's endowment arm to spin off real estate team in major shakeup

Harvard Management Co. Inc. is spinning off its real estate investment team as part of a major shakeup at the company, CoStar Group reported.

The company manages Harvard University's $35.7 billion endowment fund, which is billed as the largest endowment in the U.S.

The team, which is charged with managing HMC's direct real estate investments, will be spun off and serve as an external investment manager to Harvard Management "by the end of calendar year 2017," CoStar Group reported, citing Harvard Management President and CEO N.P. Narvekar's letter to the Harvard community Jan. 26.

"The real estate portfolio has been a key driver of returns for HMC since the direct platform was established in 2010, and the team will continue to be a valuable partner to HMC moving forward," the news outlet quoted Narvekar as saying.

While Harvard's fund reported a negative 2% investment return for the fiscal year ended June 30, 2016, its real estate portfolio delivered a 13.8% return, the report said.

Other changes planned by Harvard Management include reducing its staff by half and relinquishing its hedge fund teams, according to the report.