The Case for Commercial Real Estate Credit

Topics: CRE Credit

This White Paper will discuss portfolio asset allocation theory, the concept of asset class "correlation," and the potential role of "alternative" investments in a diversified portfolio, generally, and commercial real estate (CRE) credit as a distinct alternative asset class.

The Benefits of CRE Credit in an Investment Portfolio

Adding CRE credit to an investment portfolio can provide diversification benefits as a result of the lower correlation with the returns on stocks or bonds. An investment in CRE credit can also provide the following benefits:

  • Steady income: a fixed income opportunity with the potential for higher current income
  • Potential for higher risk adjusted returns: returns similar to higher risk, higher yielding fixed income investments but with lower volatility
  • Defensive position in the capital structure: when property values decline, the equity position absorbs the loss before the mortgage loan value is impacted

Download this informative White Paper to learn how CRE allocations, both in equity and credit, can play important roles in a well-structured investment portfolio.

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