The Importance of Expertise in Capital Market Investment

Many investors who are seeking to construct a well diversified portfolio often focus almost exclusively on publicly traded equities and fixed income securities. They fail to consider the role that well chosen real estate investments can play in addressing the challenges presented by a world of low to negative real interest rates, broadly eroded credit quality and near record stock prices.

While the proliferation of ETF’s and industry specific index funds has made it easier for investors to target the exposure they need to various invest-able sectors of the economy, the perceived obstacles to investing in non-securitized real estate persist.  Given the increasing uncertainty related to the continuation of quantitative easing, the potential headwinds from the sequester and increasing volatility in public markets, it is now a good time to review those perceived obstacles and reassert the rationale for making an allocation to the asset class when it is time to re-balance one’s portfolio.

The Benefits Of Investing With Expertise

In the absence of such experience and expertise, it is difficult to realize all the benefits of a well structured real estate investment. Those benefits include: 

• The reduction of overall portfolio risk by combining assets classes that respond to constantly evolving macroeconomic fundamentals in different ways.
• Absolute returns well in excess of the riskless treasury rate and yields generally available in the in the investment grade bond market without a commensurate increase in credit exposure.
• A hedge against a possible onset of inflationary pressures which could seriously erode the value of stocks and  bonds; strong and stable cash flows and the potential for price appreciation.

While real estate will never be a completely transparent and liquid asset, it should not be under represented in any well diversified portfolio.

The Difficulties of Investing Without Expertise

The major difficulties confronting the typical investor when considering investing in real estate include:

• Lack of transparency
• The difficulty of price discovery 
• The need for operational expertise to drive performance. 

All of these difficulties are easily overcome by teaming up with Block Real Estate Services, (BRES) to determine an appropriate strategy. With over 200 years of experience in sourcing and structuring real estate transactions, you can be confident that we have the discipline and analytical wherewithal  to correctly price and source both the debt and equity components of any transaction.  Further, with a portfolio of over 22 million square feet under management, you can be confident that we have the operational expertise to add value for our investors.  In addition, our principals contribute capital to each of our deals so that our interests are aligned as closely as possible with those of our investors.

In short, we take our role as stewards seriously. Click here to learn more about our investment services. 

Scott Smith

Director Of Capital Markets
Block Funds
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