Individual investors are increasingly discovering there are diversification benefits to adding private real estate to their portfolios. Given private real estate’s historical income returns, diversification, and strong overall risk-adjusted returns, we believe it should have a place alongside stocks, bonds and public real estate in a diversified investment portfolio.
Quarterly analysis of commercial real estate property types in more than 50 MSAs provided by Dr. Glenn Mueller, Real Estate Investment Strategist for Black Creek Group. The cycle monitor analyzes occupancy movements in five property types in more than 50 MSAs. The five property type cycle charts summarize almost 300 individual models that analyze occupancy levels and rental growth rates to provide the foundation for long-term investment success.
1 Many REITs do not produce income but still pay distributions. These distributions may represent a return of capital. There is no guarantee that shareholders will receive distributions or that an investment in the REITs sponsored by Black Creek Group LLC will be profitable or that the REITs will realize growth in the value of their assets. A REIT’s distributions may be paid from sources other than cash flows from operating activities, such as cash flows from financing activities, which may include net proceeds from primary shares sold and borrowings (including borrowings secured by REIT’s assets). A REIT’s future distributions may be paid from these sources as well as proceeds from the sales of assets, proceeds from the issuance of shares pursuant to the REIT’s distribution reinvestment plan, cash resulting from a waiver or deferral of fees, and interest income from its cash balances. There is no limit on distributions that may be made from these sources. To the extent a REIT pays distributions from sources other than cash flows from operating activities, it may have less funds available for the acquisition of properties, and stockholders’ overall return may be reduced.
2 Although commercial real estate has historically provided returns that have exceeded inflation, there is no guarantee that the REITs sponsored by Black Creek Group LLC can generate the returns necessary to exceed inflation.