Real estate has been somewhat mischaracterized during the past few years.
There is a narrative that investors have been moving up the risk spectrum, shifting into value-add and opportunistic strategies because they are seeking higher returns or taking on more risk. That would normally be typical of early-cycle investing. However, there was not necessarily consensus that the past two years represented an early cycle. In fact, many investors were still awaiting full valuation adjustments within their portfolios.
So, has it truly been a preference for risk or a preference for structure?
Following the onset of rate hikes in 2022, investors have not abandoned real estate. They have been constrained in how they can invest in it. Closed-end funds and non-core strategies, for example, have continued to attract capital not because overall appetite for risk has increased, but because they provide something investors need right now: the ability to deploy capital. Managers
