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Why commercial real estate, especially Class A industrial properties, offers a stable and high-yielding investment opportunity for international investors
It used to be that only institutions and the wealthiest of investors would invest in commercial real estate. But increasingly, individual investors can take advantage of this attractive asset class. CRE Income Fund helps investors like you personalize and diversify their portfolios and maximize returns with confidence through private equity commercial real estate.
An alternative to the broader market
With a shrinking public market, investments within the stock market and across stocks and bonds, are becoming increasingly correlated. As a result, diversification is getting much harder to achieve in the public market.
A conventional recommendation to reduce portfolio risk and in turn maximize portfolio potential was to allocate at least 20% of an investment portfolio toward alternatives with low or no correlation with traditional, publicly traded assets.
Institutional investors have a long history of diversifying into alternative investments, with pensions and endowments often allocating 28-52% of their portfolios respectively to alternatives.
In today’s market, individual investors are likewise increasing the percentage of their portfolios devoted to alternatives. Private commercial real estate can play a unique and important role.
- Private, not public
- Commercial, not residential
- Passive, not active
Private Real Estate Investments, Not Public
When many people think of real estate investment, they think of public Real Estate Investment Trusts (REITs). However, REITS are traded on the same exchanges as stock and bond securities and are subject to the same risks as traditional equity and fixed-income securities. Simply put: REITs do not protect investors from overall market risk.
Private real estate investments, however, are weakly correlated to the public markets, and thus provide better protection against capital loss as well as market volatility.
Investing across multiple private real estate asset types and sectors (such as Industrial and Technology) provides additional diversification and risk protection.
Commercial, Not Residential
Commercial properties on average have higher returns for investors than residential properties, due to higher quality tenants, longer term leases, and more predictable income. Additionally, most commercial properties are NNN (triple net) which means that the taxes, insurance, and maintenance costs are passed on to the tenants.
An important distinction for investors is that commercial real estate asset value is correlated to Net Operating Income (NOI). NOI in turn is not correlated with the broader market: it can stay steady or increase when the market declines or inflation rises. Thus, commercial real estate is a better hedge against market volatility.
Passive Investing, Not Active
Active investing is high risk, high responsibility. Active real estate investing typically involves rental properties and house-flipping. Return potential for each of these options is limited to rental income and appreciation. Both require a significant amount of personal knowledge, time, and/or contracted expertise.
Large capital commitments are required upfront and for the lifetime of the investment, which reduces an investor’s ability to diversify. Risk is concentrated in specific asset classes and geographies, and as sole owners, investors bear the losses when properties sit idle, require unexpected maintenance, or sell below expectations.
Passive investing is more flexible and predictable. Passive real estate investors typically provide only capital and allow professionals to invest in real estate on their behalf. Passive investors bear responsibility only for their investments, not the buildings themselves.
Passive investments usually offer investors a portfolio of real estate, which offers greater diversification potential, and unlike active investments, which earn returns primarily through rental income and appreciation, passive investments can also earn returns through interest payments on debt investments. Passive investment options often carry lower investment minimums, which offers greater accessibility to investors of all sizes.
Why CRE Real Estate Income Fund?
CRE Income Fund is a commercial real estate income fund designed to provide current income for investors, along with the potential for capital gains.
This secured real estate income Fund purchases and owns a diversified portfolio of income-producing assets, purchased to produce above market returns. The Fund is secured by commercial real estate holdings across the United States.
Benefits of Investing in CRE Income Fund for International Investors
1. Currency Hedge
One of the most significant advantages for international investors in the CRE Income Fund is the inherent currency hedge that comes with investing in U.S. assets. The U.S. dollar is considered a safe-haven currency, often appreciating during periods of global uncertainty.
By investing in a dollar-denominated fund, international investors can protect their investments against the depreciation of their home currency. This hedge is particularly valuable for investors from countries like South Africa with volatile currencies, as the stability of the U.S. dollar can help preserve and potentially enhance the value of their investment returns.
2. Access to a High-Yield Investment
The CRE Income Fund targets an annual cash yield of 10% to 12%, which is significantly higher than the returns offered by many other asset classes. This high yield is achieved through the fund’s strategic investments in Class A industrial real estate, including logistics hubs, warehouses, and R&D centers.
These properties are in high demand due to the ongoing expansion of e-commerce, the reshoring of manufacturing activities, and the growth of technology and innovation sectors.
3. Exposure to Key Growth Sectors
The U.S. commercial real estate market is undergoing significant transformation, driven by several key trends:
E-Commerce:
- E-Commerce is poised to capture 41% of global retail sales by 2027—Up from Just 18% in 2017.
- E-Commerce Sales Increased by 7% in the US in 2022.
- Global E-Commerce Growth Is Expected to Achieve a 9% Compound Annual Growth Rate Through 2027—More than Double Projected Brick-and-Mortar Retail Growth of a More Moderate 4%.
Reshoring:
- Reshoring trends accelerated by the pandemic create significant opportunities for domestic industrial real estate as companies seek to optimize supply chains and bring operations closer to home.
- The impact of reshoring manufacturing will be dramatic and far-reaching in terms of industrial real estate, local and national tax revenues, increases in jobs, and growth in regional and national economies.
R&D Centers:
- R&D/flex facilities currently represent the third largest primary category of industrial real estate with approximately 12.5% of total U.S. industrial square footage as of Q1 2020.
- Over the past ten years, the industrial flex asset class has experienced significant growth due to increased tenant demand from a variety of industries.
- This growth is evidenced by the total square footage of R&D/flex space increasing from 44 million SF in Q1 2010 to 171 million SF in Q1 2020. Additionally, over the same period, flex transaction volume increased from $3.4 billion to $24.6 billion.
To learn more about the CRE Income Fund, you can visit Benzinga’s review and check out the Trustpilot reviews to see what other investors are saying about their experiences.
Unlocking the Power of Passive Income with CRE Income Fund https://youtu.be/JM8EELJz5lw
Bryan Smith
+27 83 300 8888
CRE Income Fund
Dallas, Texas
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