Why Commercial Real Estate?

Commercial real estate is often considered the fourth major asset class behind stocks, bonds and cash. Adding real estate to a portfolio may help investors increase income, reduce risk, hedge against inflation risk and gain upside growth potential.

Diversification

Real estate can be a powerful diversifier when added to a traditional investment portfolio and may help improve returns while decreasing overall portfolio risk.  

Attractive Income

Real estate has historically provided relatively attractive and consistent income streams via rents collected from long-term leases.

Lack of Correlation

Direct-owned real estate is generally considered non-correlated to overall movements in the stock market and may help in reducing exposure to stock market volatility.

Hedge Against Inflation

Hard assets like real estate generally move in conjunction with inflation potentially providing some degree of protection against inflation risk.

Why consider a diversified real estate strategy?

Various real estate sectors perform differently over time and it’s difficult to predict which one will perform best from year to year. Diversifying across multiple real estate sectors may help reduce dependence upon, and overexposure to, one particular sector. In addition, we believe that our structure as a perpetual-life REIT will allow us to acquire and manage our investment portfolio in a more active and flexible manner.

Diversification by asset class or among real estate sectors does not necessarily protect against losses.

 

Annual returns by property sector
 

Past performance is not indicative of future results. Diversification does not assure a profit or protect against losses in a declining market. Information provided by RREEF America L.L.C. Returns are unlevered, property level and gross of fees. Returns include significant unrealized appreciation or depreciation. Source: NCREIF. NCREIF data reflects the returns of institutional quality real estate in specific sectors and does not reflect the use of leverage or the impact of management and advisory fees. RREEF Property Trust will own different types of assets than in NCREIF and will employ leverage. As of December 31, 2015.

Diversification Through Blended Approach

According to the National Association of Real Estate Investment Trusts ("NAREIT"), the following benefits are generally associated with blending real estate and publicly traded REITs. Furthermore, we believe that adding real estate-related debt further enhances diversification and gives RREEF Property Trust the flexibility to potentially capitalize on additional income opportunities.

However, diversification by asset class or among real estate sectors does not necessarily protect against losses.

A Measure of Downside Protection

The relationship between publicly traded REITs and real estate means that an optimally blended portfolio can provide an important hedge against downturns in the real estate market: when one side of the real estate market is falling, the other can potentially buoy returns for the overall real estate portfolio.
 

Source: NAREIT - Optimizing Risk and Return in Pension Fund Real Estate: REITs, Private Equity Real Estate and the Blended Portfolio Advantage, February 2011.


Risk Adjusted Returns

The Past 22 years of historical data demonstrate that an optimally blended real estate portfolio, including approximately one-third in publicly traded REITs, has provided stronger returns, on both an absolute and a risk-adjusted basis, than portfolios simply dominated by real estate investments.
 

Source: NAREIT - Optimizing Risk and Return in Pension Fund Real Estate: REITs, Private Equity Real Estate and the Blended Portfolio Advantage, February 2011.


Performance

An optimally blended portfolio of real estate and about one-third publicly traded REIT investments produced positive double-digit or single-digit average annual returns for all rolling five-year periods over the past 22 years without a single period of negative returns – even during the most recent real estate market crisis.
 

Source: NAREIT - Optimizing Risk and Return in Pension Fund Real Estate: REITs, Private Equity Real Estate and the Blended Portfolio Advantage, February 2011.

Contact

Shareholders
To speak with a shareholder representative, call
(855) 285-0508

Advisors
To speak with a sales representative, call
(800) 621-1148

 

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