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Portfolio reconstruction: Investors shift away from “legacy” holdings in search of growth
Altering course on a commercial real estate portfolio can be a bit like steering a battleship. Yet there are plenty of changes afoot in allocations these days with capital looking to identify growth opportunities.
The pandemic accelerated portfolio restructuring that, for many, was already under way prior to 2020. “Given the divergence in performance across property types since the onset of the pandemic in 2020, many institutional investors are reassessing the role of legacy assets and have increased their use of sector-specific funds across each of the traditional property types in order to reposition or rebalance their portfolios for the medium to long term,” says Carly Tripp, global chief investment officer and head of investments for Nuveen Real Estate.
Legacy portfolios have largely consisted of retail and office assets. Pressure on retail was magnified during the pandemic, and office has experienced a major shift due to the rise of remote and hybrid work mode