Institutions May Deploy Dry Powder for Real Estate Heading into 2023
December 19, 2022 | Beth Mattson-Teig | WealthManagement.com
It sounds counterintuitive to the slowdown in new investment activity seen in recent months, but a new industry survey shows that institutions are continuing to raise their target allocations to commercial real estate.
Rebalancing is occurring now, but there also is some “wait and see” on reinvestment as private market valuations are still transitioning relative to the higher cost of capital, notes Todd Henderson, co-Global Head of Real Estate at DWS Group, which has $38 billion in AUM in the U.S. REIT values have already reset, and that repricing is beginning to roll through appraisal based valuations. “So, institutions are not necessarily making a lot of new allocations today,” he says.
