Real Estate Insights | Black Creek Group

Private Real Estate Can Offer Powerful Portfolio Benefits

Private real estate has historically low correlation to other asset classes, and can be a valuable risk management tool.^1,² Use the interactive slider on the graph below to see examples of how allocations of different percentages of private real estate would have affected overall annual returns over the last 20 years.

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Private Real Estate Can Offer Powerful Portfolio Benefits

Individual investors are increasingly discovering there are diversification benefits to adding private real estate to their portfolios. Read more about private real estate's historical income returns, diversification, and strong overall risk-adjusted returns and why we believe it has a place alongside stocks and bonds.

Private Real Estate Has the Potential to Help Investors Weather a Bear Market

With lower volatility and low correlation to equities and bonds, private real estate is potentially durable enough to ride out market downturns.

How Investors Benefit from Lower Capitalization Rates

How Investors Benefit from Lower Capitalization Rates unlike residential real estate which is relatively easy to analyze the property value, commercial real estate involves many more factors. Understanding capitalization rates is key to evaluating commercial real estate investment options as it demonstrates how a property can perform in the long term.

A Real Alternative to Fixed Income

Recent lower yields from fixed income vehicles have led many investors to seek income alternatives that provide the same type of diversification advantages as traditional bonds. Read how commercial real estate has historically delivered higher income returns than bonds, cash or equities as a part of a diversified portfolio.

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¹An investment in a real estate investment trust sponsored by Black Creek Group or its affiliates (each a Black Creek Group REIT) is not a direct investment in commercial real estate, but rather an investment in a REIT that owns commercial real estate. Although a Black Creek Group REIT’s stock price is subject to less volatility, a Black Creek Group REIT’s shares may be significantly less liquid than shares of publicly traded securities, and are not immune to fluctuations, including downward fluctuations. The value of a Black Creek Group REIT’s underlying property holdings will fluctuate and be worth more or less than the acquisition cost when sold. Investors are advised to consider the limitations on liquidity of Black Creek Group REIT shares when also evaluating the volatility of a Black Creek Group REIT’s stock price as compared to that of the stock prices of publicly traded securities.

²This interactive graph presents, with respect to a hypothetical portfolio with various allocations to private real estate and to publicly-traded REITs or bonds over the 20 years ended December 31, 2019, the average annualized yield, annualized standard deviation and the percentages of such years that the portfolio would have yielded various levels of positive returns and negative returns. Percentages in the positive/negative categories represent the percentage of annual total returns (for each of the 20 years) falling into each category. Historical performance information is not indicative of future results. The hypothetical portfolio performance is based on historical source data from:Bloomberg; NCREIF; NAREIT. 20 years ending December 31, 2019. Private real estate is represented by the NCREIF Open-End Diversified Core (ODCE) Index, an equal weighted, time weighted index representing a blended portfolio of institutional-quality real estate reported net of management and advisory fees. The term core typically reflects lower risk investment strategies, utilizing low leverage and generally represented by equity ownership positions in stable U.S. operating properties. Funds are weighted equally, regardless of size. While funds used in this benchmark have characteristics that differ from net asset value real estate investment trusts (“NAV REITs”) (including differing management fees), Black Creek Group’s management believes that the NCREIF ODCE Index is an appropriate and accepted index for the purpose of evaluating returns on investments in NAV REITs. NAV REITs have the ability to utilize higher leverage than is allowed for the funds in the NCREIF ODCE Index, which could increase the NAV REIT’s volatility relative to the NCREIF ODCE Index. Publicly-traded REITs are represented by the FTSE NAREIT All Equity REITs Index, which is a free-float adjusted, market capitalization-weighted index of publicly traded U.S. Equity REITs. Bonds are represented by the Barclays Capital Aggregate Bond Index, an index of securities that are SEC-registered, taxable and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities. Bond income return is represented by the yield to worst of Bloomberg Barclays US Aggregate Bond Index. There are many material differences between publicly-traded REITs and private real estate, including differences in fees and expenses, liquidity, safety and tax features. For example, although a NAV REIT’s stock price may be subject to less volatility, a NAV REIT may be significantly less liquid than publicly-traded REITs or bonds, and is not immune to fluctuations, including downward fluctuations. Investors are advised to consider the limitations on liquidity of NAV REIT shares when also evaluating the returns and volatility of NAV REITs to publicly-traded REITs or bonds. An investment cannot be made directly in the indices shown above. Comparisons shown are for illustrative purposes only and do not represent specific investments or the performance of NAV REITs. Securities of publicly-traded REITs and bonds provide ready liquidity and are easily traded. NAV REITs have the ability to utilize higher leverage than is allowed for the funds in the NCREIF ODCE Index, which could increase a NAV REITs volatility relative to the Index. Past performance does not guarantee future results. These indices are used in comparison to the NCREIF ODCE Index in order to illustrate the differences in historical total returns generated by private real estate, publicly-traded REITs and bonds. The prices of securities represented by these indices may change in response to factors including: the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates and investor perceptions. All indices are unmanaged and do not include the impact of fees and expenses.

³Standard deviation is a measurement of the variability (volatility) of a security or portfolio of securities, derived from the security’s or portfolio's historical returns. The higher the standard deviation, the greater potential for volatility.

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Insights

Private Real Estate Can Offer Powerful Portfolio Benefits

HYPOTHETICAL PORTFOLIO WITH BLEND OF PRIVATE REAL ESTATE AND PUBLICLY-TRADED REITS²

OVER LAST 20 YEARS (2000-2019)

Use the slider to see how blending private real estate and publicly-traded REITs can reduce down-side risk.

PRIVATE REAL ESTATE

PUBLICLY-TRADED REITS

HYPOTHETICAL PORTFOLIO WITH BLEND OF PRIVATE REAL ESTATE AND BONDS²

Over Last 20 Years (2000 - 2019)

Use the slider to see how blending private real estate and bonds can reduce down-side risk.

Private Real Estate

Bonds

Featured Insight

2021 Market Outlook

More Insights

Are You A Resident of Ohio or New Jersey?

Are You A Resident Of New Jersey?

Are You A Resident Of New Jersey or Ohio?

Are You A Resident Of Washington?

Insights

Private Real Estate Can Offer Powerful Portfolio Benefits

HYPOTHETICAL PORTFOLIO WITH BLEND OF PRIVATE REAL ESTATE AND PUBLICLY-TRADED REITS2

OVER LAST 20 YEARS (2000-2019)

Use the slider to see how blending private real estate and publicly-traded REITs can reduce down-side risk.

PRIVATE REAL ESTATE

PUBLICLY-TRADED REITS

HYPOTHETICAL PORTFOLIO WITH BLEND OF PRIVATE REAL ESTATE AND BONDS2

Over Last 20 Years (2000 - 2019)

Use the slider to see how blending private real estate and bonds can reduce down-side risk.

Private Real Estate

Bonds

Featured Insight

2021 Market Outlook

More Insights

Are You A Resident of Ohio or New Jersey?

Are You A Resident Of New Jersey?

Are You A Resident Of New Jersey or Ohio?

Are You A Resident Of Washington?

HYPOTHETICAL PORTFOLIO WITH BLEND OF PRIVATE REAL ESTATE AND PUBLICLY-TRADED REITS²

HYPOTHETICAL PORTFOLIO WITH BLEND OF PRIVATE REAL ESTATE AND BONDS²