Disclaimer: Views in this blog do not promote, and are not directly connected to any L&G product or service. Views are from a range of L&G investment professionals, may be specific to an author’s particular investment region or desk, and do not necessarily reflect the views of L&G. For investment professionals only.
Platform investing in real estate: Unlocking value through operational exposure
Our recent paper dives into platform investing – a ‘private equity-style’ strategy where real estate platforms are acquired and potential returns generated via the revenues of operating businesses.
We believe that real estate investing is shifting, with investors seeing the value in supplementing traditional strategies – focused primarily on rental income, capital appreciation and asset-level optimisation – with complementary investments that offer potential additional return drivers and diversification benefits, helping to meet evolving portfolio objectives.
As a result, attention is increasingly turning to operating intensive real estate sectors where value creation is driven not only by the appreciation of underlying assets, but by the performance and scalability of the businesses that are operated from them. By investing in operating platforms with established business models and supporting their expansion through a private equity-style investment approach, asset managers with the required expertise may be able to offer investors access to broader value-creation levers than those available through conventional property ownership.
Our recent paper explores what platform investing means in a real estate context and why it could be attractive for investors. It also assesses how asset managers can actively influence outcomes after taking stakes in operating platforms.
Read the full paper here.
Assumptions, opinions, and estimates are provided for illustrative purposes only. There is no guarantee that any forecast will come to pass. It should be noted that diversification is no guarantee against a loss in a declining market.
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