It’s a leading question to ask debt strategists to rate the importance of debt as a real estate investment strategy. However, it is safe to say they all feel it is underrated.
“Real estate debt should be a critical component of an investor’s portfolio,” enthuses Richard Flohr, a partner at CrossHarbor Capital Partners, and the portfolio manager for debt strategies. He cites appealing returns, downside protection and low correlation with other types of investments as the chief attractions.
But where does it fit? And why is debt in danger of being overlooked, and undervalued within so many portfolios?
The downside of no upside
First of all, debt isn’t sexy. It doesn’t set the pulse racing. However, its attraction lies in the protection it offers during a downturn.
“Real estate debt should not be an investor’s only exposure to real estate because by definition, debt doesn’t have an upside,” Flohr notes. “It does,
