Displaying items by tag: real assets

Several Western and Midwestern cities, including Boise, Idaho, and Stockton, California, are projected to join the "million-dollar club" in median home prices over the next decade. 

Realtor.com's forecast estimates Boise’s median price will rise from about $464,000 to $1.2 million by 2033, following a strong growth trend seen in previous years. Other cities expected to cross the million-dollar mark include Salt Lake City, Portland, and Colorado Springs. Stockton’s proximity to costly Bay Area markets is driving its prices, with an anticipated median of $1.4 million by 2033. 

Denver and Sacramento are also projected for substantial gains, reaching approximately $1.3 million and $1.1 million, respectively. These forecasts hinge on continued demand and limited supply, but a surge in new construction could temper these projected gains.

Finsum: One key aspect of this to watch is how fast wages are growing in these cities as this is a strong indicator of future home price growth

Pension and Benefits Monitor and Fiera Capital hosted a webinar titled “The Rise of Private Real Estate Credit in Canada’s Evolving Investment Landscape.” Industry leaders, including Michael Le Coche from Fiera Real Estate, discussed the advantages of private real estate credit as an alternative to traditional fixed-income options. 

The asset class offers higher yields, enhanced diversification, and stability amid market volatility, making it increasingly appealing. The event highlighted how Basel IV regulations are reshaping lending, with private credit filling gaps left by banks. 

Experts also discussed the unique regional dynamics within Canada’s real estate markets, which impact private credit strategies. Additionally, the importance of sustainable practices in real estate credit was emphasized, aligning environmental goals with financial performance.

Finsum: With rates falling again the real estate market could really look to open up given the tight supply constraints. 

The drop in interest rates last month contributed to an over 3% rise in the FTSE Nareit All Equity REITs Index, continuing a strong upward trend since October 2023, pushing growth to nearly 40%. In the third quarter, the index saw a notable 16.8% return, outperforming broader stock indices. 

Gains were broad, led by data centers, specialty, and office REITs, though residential REITs slightly declined. The shift in rates is also expected to bridge the gap between public and private real estate markets, potentially revitalizing commercial real estate investment. 

Active REIT managers have adjusted sector allocations, with healthcare, data centers, and telecommunications seeing increased interest. With REITs benefiting from strong balance sheets and attractive debt rates, the outlook for continued growth and activity remains positive for the coming quarters.

Finsum: We think gains are more likely to be robust in residential REITs because they are less dependent on work policies and labor market conditions.

While nontraded real estate investment trusts (REITs) have faced another challenging year, financial advisors are seeing a rise in sales of alternative investments overall. By August, financial advisors sold $76.6 billion of illiquid alternatives, including nontraded REITs, business development companies (BDCs), interval funds, and private placements. 

This amount matches 2023's total, with projections indicating the industry will surpass $115 billion by the end of 2024. Sales of nontraded REITs have notably decreased to $4.2 billion in the first eight months, compared to their peak of over $33 billion in 2022. 

However, BDCs have overtaken REITs as the most popular alternative investment sold, with $23.7 billion in sales through August. Blackstone Inc. leads in nontraded REIT and BDC sales this year.

Finsum: There is still an elevated risk premium built into most non-treasury rates right currently but REITs could see a bounce back with that falling soon. 

The interval fund market has seen notable growth in the first half of 2024, with net assets reaching $86.4 billion, a jump of nearly 11% since the first quarter, according to Robert A. Stanger & Co. Similarly, Morningstar reports that 100 interval funds manage approximately $80.7 billion, highlighting a rising trend fueled by RIAs. 

XA Investments adds that there are currently 110 interval funds managing $101.6 billion, with expectations to see up to 255 funds and $175 billion in net assets by the end of the year. The sector has rebounded from last year’s challenges in real estate-focused funds, now propelled by increased interest in credit and private equity strategies. 

Cliffwater LLC has emerged as a leader, managing nearly a quarter of the market's assets, with its private credit interval funds raising $4.9 billion so far this year. Meanwhile, infrastructure-focused interval funds are also seeing increased investor attention, contributing to a broader market expansion.

Finsum: It’s clear this is a new trend for RIAs and that they are seeing something in interval funds that their clients need.