The three styles of institutional real estate investing
- October 1, 2017: Vol. 29, Number 9

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The three styles of institutional real estate investing

by Simon Martin

Most investors with real estate in their portfolios will own two or three different types of investments. Those different types deliver different qualities to the portfolio.

A significant proportion of the investment community owns real estate because it offers a diversification benefit against other asset classes. These are core investors who value stable cash flows and focus on the high-quality end of the market. They value diversification, like the duration quality and want the income stream. They are proponents of a balanced portfolio.

At the other end of the spectrum are investors who use real estate as a pure return enhancer. They focus on value-add and opportunistic strategies. They are attracted by the high total return and the risk-adjusted nature of those returns. They also may invest in core; risk tolerance and return needs really determine the balance between the two.

The final piece is a position in between — lower-intensity value-add that is stil

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