“Post-2008, investors are searching for investments which will generate reasonable, risk-adjusted returns with hopes and anticipation of appreciation in the original investment,” he told PLANSPONSOR. Real estate investments—whether real estate investment trusts (REITs) or private partnerships—may be a logical choice for low-risk investors who want to preserve their original investment, as well as pension plans, he added.
Today’s economic environment provides the opportunity to record debt on quality real estate at record low rates. “As rates rise, I believe the value of the assets which have the low-cost debt recorded against the properties will become more valuable,” Schreiber said. “[Higher rates] could even lower the pricing on assets that are being introduced to the marketplace.”
Public pension funds invested in real estate typically allocate 6% to 14%, whereas individuals often allocate 10% to 20% of their portfolios to the investment, he said.
Schreiber anticipates a great opportunity for real estate investments in the next year or two, but investors should keep in mind that it is likely a short-term opportunity. “Our perspective is we have a sense of urgency,” he said. “Various markets around the country have stability and occupancy in properties. At the same time, we still have real estate markets in various areas of the country that are performing very poorly.”
Going forward, the lack of commercial development should contribute to positive net absorption and an increase in occupancy, Schreiber concluded.