Why commercial real estate (CRE) debt?
CRE debt offers an alternative source of income and diversification at a time when both are hard to find.
Need for cash flow
Historically low fixed income yields have reduced income levels on bonds and increased downside risk.
Commercial real estate debt offers high quarterly cash flows with historically low volatility* relative to traditional fixed-income.
Need for transparency
Proliferation of "alternative fixed income" has pushed investors into risky and opaque investment structures.
Commercial real estate debt is transparent, backed by hard assets with reasonable loan-to-value ratios.**
Need for diversification
Excess liquidity around the globe has increased correlation across asset classes limiting the ability to diversify portfolio risk.
Commercial real estate debt has exhibited low correlation to other asset classes over time.
Correlation of CRE Debt to Major Asset Classes (2011-2019)1
*Standard deviation calculated from Bloomberg REIT and High Yield indices.
**Industry standard for “reasonable loan-to-value” is 80% or lower – source: Investopedia.com