Why Invest in Private Real Estate?

private real estate, real estate,As the third-largest investable asset class, real estate is a vital part of the investment universe. Commercial real estate (which by definition includes multifamily, office, retail, healthcare, industrial, and other property types) represents 17% of the U.S. investment market, according to Nareit, an organization that represents the real estate investment trust (REIT) industry. But, for many investors, real estate remains a relatively small portion of their investment portfolio, and is often misunderstood.

While publicly traded REITs are the most well-known real estate investment vehicle structure, these publicly traded stocks are far from being the only way for investors to access the growth, income-generation, and diversification potential of real estate. Private real estate (PRE) is a major—but not well understood—component of the overall real estate market. Given its size, the range of opportunities and benefits it offers, PRE is a structure that financial advisors and their clients cannot afford to ignore. The primary benefits investors seek with PRE include:

  • Investment diversification through lower exposure to public equity markets
  • Potential for growth and income
  • Lower volatility that drives attractive risk-adjusted returns
  • Possible protection against inflation

There are many different ways to access PRE—from non-listed diversified funds to single property investments—presenting financial advisors with a variety of opportunities to find the right mix of strategies, vehicles, and managers to meet their clients’ goals.

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About The Author

Benefit Street Partners is a leading alternative asset management firm with approximately $27* billion in assets under management, and is a wholly owned subsidiary of Franklin Resources, Inc. that, together with its various subsidiaries, operates as Franklin Templeton. *AUM is as of January 31, 2020 and refers to the assets under management for all credit funds and separately managed accounts managed by BSP. AUM amounts are unaudited and subject to change.