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Real estate can produce income like a bond, enjoy capital appreciation like an equity, and derive returns from both capital and income cycles.
We believe that real estate warrants consideration in most investment strategies. Long-term investment objectives mean that investors have increasingly recognized that real assets have the potential to provide good diversification and an attractive risk/return profile.
State Street Global Advisors Ireland has been providing real estate asset management services to institutional investors since 1981 and currently manages circa €1.4bn1 in direct and indirect real estate assets located in Ireland, the UK and continental Europe.
The Real Estate team, based in Dublin, manages portfolios comprising more than 90 buildings with in excess of 300 leases/licences, and a combined rent roll of c. €65m per annum1. The portfolios are primarily invested in the three main sub-sectors of the market, comprising offices, retail and logistics buildings.
At State Street Global Advisors Ireland, we adopt a fundamental approach to real estate as an asset class. With our extensive relationship networks within local markets we are well positioned to assess the relative value of the asset class and identify the macroeconomic forces that are likely to influence returns across both geographies and sectors of the market.
This approach is central to our process of developing portfolio strategies which are in turn implemented by our experienced team of real estate professionals.
As no two properties are the same, our formula for delivering performance to clients is through the identification and exploitation of opportunities to add value to the assets that we manage.
The type of projects our team is actively involved with on a daily basis include lease buybacks/re-gears, building refurbishments, letting management, rent review negotiations together with the development and implementation of buy/sell/hold strategies for individual assets.
Led by Ian Johnston, who has been involved in managing State Street Global Advisors Ireland’s real estate portfolios for over 25 years, the team of dedicated property professionals has over 90 years’ combined experience in the industry. The team is based in one of State Street Global Advisors Investment Centres and is located in Dublin.
We believe that real estate warrants consideration in most investment strategies. Long-term investment objectives mean that investors have increasingly recognised that real assets have the potential to provide good diversification and an attractive risk/ return profile. Real estate can produce income like a bond, enjoy capital appreciation like an equity, and derive returns from both capital and income cycles.
The case for including real estate in a balanced portfolio stems from the low, and sometimes negative, correlation it offers relative to other major asset classes, thus aiming to lower portfolio volatility and seeking to enhance returns on a risk adjusted basis.
Potential for Strong and Stable Income Returns
The income return from a real estate portfolio is derived from the rent roll produced by the underlying assets and is an integral part of the overall return offered by the asset class, typically providing a premium over bond yields. We believe the more diversified a real estate portfolio is in terms of sectors, geographies and lease expires, typically the more stable the income stream.
Offers an Efficient Hedge Against Inflation
In times of economic growth and rising inflation, real estate occupational markets tend to benefit from increased competition for space which in turn drives rental values. As capital values are a function of both existing income streams and future reversions, the asset class could offer an efficient hedge against rising inflation.
An Investment Backed by Real Assets
Unlike most other major asset classes an investment in real estate involves an investment in physical assets of bricks, mortar and land. This means that even when tenants vacate buildings the real estate investor continues to hold an asset which can be re-let, refurbished or redeveloped with a view to recovering or possibly enhancing value.
This information is for informational purposes only, not to be construed as investment advice or a recommendation or offer to buy or sell any security. Investors should always obtain and read an up-to-date investment services description or prospectus before deciding whether to appoint an investment manager or to invest in a fund. Any views expressed herein are those of the author(s), are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may make different investment decisions for different clients. There are no guarantees regarding the achievement of investment objectives, target returns, portfolio construction, allocations or measurements such as alpha, tracking error, stock weightings and other information ratios. The views and strategies described may not be suitable for all investors. SSGA does not provide tax or legal advice. Prospective investors should consult with a tax or legal advisor before making any investment decision. Investing entails risks and there can be no assurance that SSGA will achieve profits or avoid incurring losses.
Performance quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, so you may have a gain or loss when shares are sold. Current performance may be higher or lower than that quoted.
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