Australia’s Resolution Capital worked with a European client with an existing private diversified real estate portfolio to enhance the liquidity, efficiency, and diversification of its real estate portfolio by adopting a global listed real estate securities sleeve.
Historically, the client’s portfolio was anchored in private real estate, primarily in its home market. While this provided stable income and access to high-quality direct assets, it limited liquidity and the client’s ability to efficiently deploy capital, diversify across sectors and geographies, and respond to rapidly evolving market conditions.
To address these challenges, the client incorporated global listed real estate as a complementary allocation within its broader real estate framework.
Rather than managing listed real estate as a standalone, the client adopted a holistic portfolio construction approach by integrating public and private real estate into a single opportunity set. It anchored allocation decisions in private market exposure and used listed REITs to deploy additional capital, broaden diversification, and enhance the portfolio’s efficiency.
Through its mandate with Resolution Capital, the portfolio benefits from exposure to a broader range of global real estate opportunities than those readily available in private markets.
REITs and Private Real Estate Enhanced Diversification, Efficiency
The charts above show Resolution Capital’s portfolio sector and regional breakdown, which includes sectors benefiting from long-term structural trends such as digital infrastructure, health care, and residential housing.
The inclusion of listed real estate has delivered many advantages:
- Daily liquidity improves the client’s ability to rebalance exposures and allocate capital more efficiently.
- The creation of opportunities to capitalize on valuation dislocations between public and private real estate given that listed markets can reflect new information more quickly.
- Strong information flow between public and private markets.
Many listed real estate managers incorporate insights from private market transactions into their investment processes, enhancing their ability to assess relative value and identify emerging opportunities. Conversely, given the quality of REIT operating platforms, and that listed markets are often a forward indicator of commercial real estate return trends, clients can benefit from the performance insights and publicly available disclosures that listed REITs provide.
Integrating listed real estate strengthened the client’s real estate strategy by improving liquidity, expanding sector and geographic exposure, and enabling a more dynamic and responsive approach to portfolio construction.
Further Information
Resolution Capital Client Services
Email: clientservices@rescap.com
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Resolution Capital Limited ABN: 50 108 584 167 AFSL No. 274491. This communication was prepared by Resolution Capital Limited (“Resolution Capital”) as the investment manager of the Resolution Capital Global Property Securities Fund (Unhedged) – Series II Fund (ARSN 118 076 529). The information in this communication is for general information purposes only. Information in communication is not intended as a securities recommendation or statement of opinion intended to influence a person or persons in making a decision in relation to investment. This communication has been prepared without taking account of any person’s objectives, financial situation or needs, and because of that, reliance should not be placed on the information in this communication as the basis for making an investment, financial or other decision. Any opinions or forecasts reflect the judgment and assumptions of Resolution Capital and its representatives on the basis of information at the date of publication and may later change without notice. Any projections contained in this communication are estimates only and may not be realised in the future. Returns from investments may fluctuate and past performance is not a reliable indicator of future performance. Resolution Capital believes the information contained in this communication is reliable, however no warranty is given as to its accuracy and persons relying on this information do so at their own risk. Unauthorised use, copying, distribution, replication, posting, transmitting, publication, display, or reproduction in whole or in part of the information contained in this communication is prohibited without obtaining prior written permission from Resolution Capital Limited.