ISA Focus: Investing in real estate debt

While traditional banks’ appetite for providing commercial real estate loans has declined, other lenders (including investment management firms such as LaSalle) have moved in to fill the funding gap. As a result, we have recently seen increasing interest from institutional investors in real estate debt. But what is it about real estate debt that makes it a compelling investment? As the second largest of the “four quadrants” of real estate, it has a value in the US and Europe alone of approximately US $4.5 trillion, representing an enormous opportunity. Real estate debt historically has produced competitive risk-adjusted returns in addition to showing low correlation to other assets. In our latest research, we examine the three-part case for investment, including: Real estate debt’s place in institutional portfolios, The role of non-bank lending, and The debt opportunity today, which takes advantage of a looming debt funding gap and attractive pricing. Contributors: Brian Klinksiek Global Head of Research and Strategy Dominic Silman , PhD Europe Head of Debt and Value-add Capital Research and Strategy Jen Wichmann Senior Strategist, Research and Strategy Hina Yamada Senior Research Analyst, European Research and Strategy