CNS AR22 Digital - Flipbook - Page 11
Private real estate, for which the return cycle
historically lags listed, is just beginning to
reprice, and we believe this will create a multiyear period of markdowns and entry points.
New capabilities in private real estate will
complement the firm’s established expertise in
listed real estate, positioning Cohen & Steers at
the intersection of listed and private real estate.
Our analysis shows that a portfolio that includes
both listed and private can deliver stronger
returns through a greater menu of property
types and markets, while reducing volatility.
In 2022, we launched our first private real
estate fund and began the development of a
non-traded REIT, the Cohen & Steers Income
Opportunities REIT, Inc. Opportunities for private
real estate will likely emerge once prices reset
amid higher financing costs and tighter
availability of financing.
New tools for portfolio modeling, navigation,
and analytics will be launched in 2023 for both
real assets and real estate. In addition, a newly
created position, Head of Real Estate Strategy &
Research, is supporting investment strategy and
portfolio construction on behalf of both portfolio
managers and clients.
Investors are also under-allocated to
infrastructure. Indeed, institutions appear to
be struggling to reach their allocation targets,
and recent research(2) estimates that sovereign
wealth funds, endowments, public pensions and
The regime shift is providing
an additional opportunity
for investors to increase
allocations to real assets and
alternative income.
other institutional investors have only funded
70% of their infrastructure targets.
We believe one contributing factor to this growing
amount of dry powder has been the difficulty
investors face when sourcing investment
opportunities in private infrastructure, which
tend to be big and complex, and are often
regulated. Listed infrastructure can serve as a
complement to private infrastructure, as our
analysis shows it has offered similar, or better,
returns, with greater correlations to private
infrastructure than equities. As is the case with
real estate, we believe infrastructure investors
can achieve better performance by allocating to
both the private and listed markets.
Tighter monetary policy is bringing inflation
down, but we expect inflation to remain
elevated—a longer-term backdrop in which we
expect multi-strategy real assets to see greater
client demand. Investors are turning to real
assets not just for their return attributes, but
also for diversification in an inflationary
environment as well.
(2) Source: Preqin. As defined by Preqin, dry powder is the amount of capital that has been committed to a private equity fund minus the amount that has been called by the general partner for investment. Preqin dry
powder figures represent dry powder for all private funds reporting data at June 30, 2022, unless otherwise noted.
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