STOV Advisory Services LLC
Real estate was long considered to be an “alternative” asset class for investment purposes. But the rise of the modern REIT (real estate investment trust) era, which helped to usher in professional asset and operational management in what had been largely a mom-and-pop sector, has re-positioned real estate as a mainstay among investment options. A high-profile acknowledgment of this evolution is the Dow Jones Indices separating real estate from financials into its own GICS (Global Industry Classification Standard) sector. The public REIT sector now has a combined equity market capitalization of about $1 trillion.
Yet, the percentage of real estate value encompassed in the public market has remained fairly steady at about 10%. How can that be? Because even today, real estate in the US is largely controlled by private institutions or family businesses.
Looking ahead, we see tremendous investment opportunity in the real estate sector given the demographic shift approaching and the corresponding generational transfer of wealth that it may bring. Retiring Baby-boomers will likely have an increasing appetite for income-producing investments, yet they may no longer want or be able to manage family real estate businesses. Or, perhaps their grown children have careers of their own and cannot continue managing the family’s real estate portfolio. Or perhaps they just need or want more liquidity.
Whatever the reason, we see a plethora of investment opportunities ahead in real estate. Whether you need a crash course in the basic understanding of REITs, a primer on real estate valuation, or a more sophisticated view of the opportunity landscape, let us help you optimize your investment goals.