Why Invest in Private Real Estate
U.S. Private Real Estate Has Historically Seen Lower Volatility than Equities and Higher Return than Fixed Income
Private real estate has historically enjoyed attractive risk-adjusted returns, with lower volatility than publicly traded REITs or equities, and a higher return than fixed income. Given this attractive risk-return profile, we believe investors may benefit from adding private real estate to their portfolios.
Source: Bloomberg as of 4Q 2023. Private real estate is represented by the NCREIF ODCE Total Return Index. Publicly Traded REITs is represented by the FTSE NAREIT All Equity Index. Equities is represented by the S&P 500 Total Return Index. Fixed Income is represented by the Bloomberg U.S. Aggregate Bond Index. Treasury Bonds (5-7 Yr) is represented by the Bloomberg U.S. Treasury 5-7 Year Index. Returns are annualized total returns and volatility is standard deviation, from 1992 to 2023. Past performance is not indicative of future results, and there can be no assurances that historical trends will continue. These returns do not reflect the portfolio of any specific investor, and there can be no assurances that any investor will receive the returns shown herein. Actual returns may be materially different.
1 Source: Cohen and Steers “The Real Estate Reel: We’re watching institutional allocations, CRE debt and property price disconnects” as of October 2023.
2 Source: Bain & Company “Why Private Equity is Targeting Individual Investors” as of February 2023.
Inflation Hedging Benefits
Private real estate can be an attractive source of income for investors.
Source: Green Street Advisors and Federal Reserve. Net operating income (“NOI”) reflects annual Green Street Advisors data as of December 2023. U.S. Consumer Price Index (“CPI”) reflects annual Bureau of Labor Statistics data as of December 2023. NOI growth represents the average NOI growth by year across the equal-weighted average of the multifamily, industrial, mall, office and shopping center sectors. Multifamily refers to apartment; shopping center refers to strip retail. U.S. CPI refers to a measure of inflation and is calculated as the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Past performance is no guarantee of future results. The information herein is provided for educational purposes only. There can be no assurances that historical trends will continue.