High interest rates and geopolitical unrest have resulted in another year of volatility for real estate investors. A report published in the October issue of Institutional Real Estate Americas, “From volatility to value creation: Why NOI growth is the new North Star for real estate investors,” by CBRE Investment Management’s Diann Hsueh, portfolio manager, and Jon San Antonio, deputy portfolio manager, highlights the investment strategy of net operating income growth as the key driver of real estate returns.
“The current environment is creating pricing dislocation and capital gaps — conditions that agile investors can exploit. The key is distinguishing between pricing displacement caused by deteriorating operating fundamentals and that driven by capital market dislocation,” write the authors. “NOI growth is the engine of returns in this cycle.”
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