Several of the speakers at the recent Real Estate In Private Equity Summit, presented in late-March by iGlobal Forum, agreed that transactions are taking place, loan sales are picking up, and opportunities are emerging as the market adjusts to new valuations and write-downs. Overall sentiment was that, while there may be some pain points on the sell-side, the market is gearing up for increased activity in the next 6-12 months.

Discussions focused heavily on the impact of the NYC political landscape on both developers and investors, how sellers are adjusting to accommodate new valuations, and the importance of driving forward the distressed space.

Victor Calanog, Global Head of Research & Strategy, Real Estate Private Markets, Manulife Investment Management was the event's morning keynote speaker. Calanog was interviewed by Dan Sullivan, Partner – Financial Markets & Real Estate, PwC, during a session that explored the trends driving the CRE space today, and which sectors and investment types are offering the best risk-adjusted returns. Takeaways included:

Economic outlook

• There’s still a great deal of uncertainty around where the economy is headed, but we have tipped over towards the expectation of a soft landing, and this means that we may not be pricing in enough risk.
• More European and Asian LPs and investors are looking favorably at the US from a risk-adjusted return basis.
• The chance of a rate cut this year is very high and needs to be priced in. If deals don't quite pencil at a 10-year treasury hovering at around 4.1, 4.2, maybe sharpen those pencils again!

Finding alpha - Those raising a lot of funds have more choices - but those not in that category need to look for innovative off-market opportunities where they can execute in a superior way versus other sources of funding.

Forecasting - the FED doesn’t want you to anticipate policy - because if everyone expects big rate cuts, there goes economic activity, everyone will be signing deals right now. The best thing is to look for guidance on forecasts from folks like Dan’s team at PwC.

AI - So far, the applications of AI have been on the productivity side, enabling people to do the same thing with less inputs. And while  AI and pattern recognition shines for deeper data sets, real estate data is so broad and shallow, and every deal needs to be evaluated differently.  We’re not quite ready to detect emerging patterns that no one else is seeing. AI holds a lot of promise for various industries - and hopefully it will soon find its way into real estate innovation.

Lowell Baron, CIO at $267 billion real estate manager Brookfield was interviewed by Philip Rosen, Co-Head of Real Estate, Weil. The two discussed the broad outlook for opportunistic real investing and shared Lowell’s thoughts on how and where to invest for value in today’s CRE market. 

Baron reflected on the up- and downcycles of CRE, sharing that every time we go through a contraction, the most important competitive differentiators are:

• Owning high quality real estate in the right asset classes and markets
• The ability to operate assets and create value in the operations
• Not taking on too much debt

The general sentiment was that over time, the value of real estate is going up - and those things will be what gets you through the cycles and the dips.

Baron also shared his thoughts on the biggest growth areas today – alternative asset classes (self-storage, student housing, studios and life science), rental housing, logistics, and hospitality.

Overall, Baron offered an optimistic market outlook. At the moment, people are nervous, and capital is scarce. However, the actual supply and demand fundamentals for most sectors and in most markets are pretty good, translating to a prime environment to invest and acquire great assets at very interesting prices. Baron stated that this is probably the most interesting investment environment we've seen since 2009/2010.

Tackling the subject of building a climate- and ESG friendly portfolio that meets investor demands, Hyon Rah, Head of Sustainability, US Real Estate, DWS Group and Uma Moriarity, Senior Investment Strategist & Global ESG Lead, CenterSquare Investment Management noted that sustainability will continue to be a growing factor in investment decisions and portfolio strategy for years to come.

However, LPs also face significant challenges. These include navigating market and economic uncertainty, identifying managers that can provide the edge to help LPs meet their mandates, overcoming liquidity concerns, achieving portfolio diversification and yield enhancements, and mitigating the impact of rising capital costs.

The event concluded with afternoon Executive Exchange discussions, where attendees participated in intimate conversations led by industry leaders from CREED, AKD, Boardwalk Storage, Jacobs PC, OnsiteIQ, Holland & Knight and JTC on topics including:

• Sourcing Foreign Capital For Your Funds
• The Rise of Private Credit & Preferred Equity
• Solving For Data Asymmetry With Advanced Tech
• Managing Distress
• Self-Storage Opportunities
• Facilitating The Flow Of LP Equity

Join us this fall in Los Angeles for the 26th Real Estate Private Equity Summit

This premier event is the go-to gathering for the real estate investment community, bringing together real estate asset managers, institutional investors, lenders, owners, and developers.

Here, you'll delve into critical industry issues, collaborate with leading minds, and shape winning strategies for success in 2025 and beyond.