Report from BNY Mellon Investment Manager Praises Liquidity and Income Benefits of REITS and Opportunistic Nature of Private Holdings
PLYMOUTH MEETING, Pa. and LONDON, July 25, 2011 — Institutional real estate investors should consider including both real estate investment trusts (REITS) and private real estate in their portfolios as both provide distinct advantages, according to a report from URDANG, the real estate investment manager and part of BNY Mellon Asset Management.
REITS can provide higher income, relatively low transaction costs and liquidity; while private real estate allocations can focus on opportunistic exposure to specific markets, according to the URDANG paper, Public and Private Real Estate: Room for Both in a Diversified Portfolio.
"We believe that each type of real estate investment has a key role to play and there is room for both in a well-balanced investment portfolio," said E. Todd Briddell, president and chief investment officer of Urdang Capital Management, which oversees URDANG's private investments and a co-author of the report.
Directly owned real estate allows investors to target specific markets, property types, strategies and business plans by purchasing individual buildings on a case-by-cases basis, according to the report. However, the report adds that these investments could come with risks such as the loss of an important tenant or unexpected expenses. Investing through REITS provides transparency, as share prices are readily available, and are generally highly liquid, enabling investors to adjust their weighting to a particular region or strategy, the report notes. It also pointed out that REITS generally have a low correlation to bonds and can provide attractive dividend income.
Notes to Editors:
Founded in 1987 with an exclusive focus on institutional investment grade real estate, URDANG offers a variety of strategies and products, managing approximately $2.6 billion in public real estate securities through Urdang Securities Management, Inc. and approximately $3.0 billion in debt and private equity real estate investments (gross) through Urdang Capital Management, Inc. for institutional investors and high net worth individuals throughout global markets and across public and private capital sectors. URDANG's research-driven process combines top down economic analysis and market/country selection with bottom up underwriting of properties, companies and management teams to seek high, risk-adjusted returns. It is one of the investment boutiques of BNY Mellon Asset Management.
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