Operational Real Estate: Risk and Reward
Client report: Investment Property Forum
Operational real estate is mostly associated with alternative real estate types, as opposed to the traditional sectors of office, industrial and retail property, and many investors view these assets as complex, illiquid and opportunistic. However, deal volumes and allocations are increasing as investors are drawn to the prospect of capturing the extra upside associated with a well-run business or a newly-emerging business model. Demand for high quality, recurring, long-term income, coupled with a relatively attractive yield profile and the ability to actively manage the assets, are also contributing attractions.
How to address the issue of risk when pricing operational assets is lacking clarity, however, with inconsistency in the approach to making real estate investment decisions, while various attributes important to assessing risk in ORE may be unfamiliar to real estate professionals.
The full report of the research and its findings is available to IPF members only but this summary is available to download.