New York-based fund manager Resource Real Estate Global Property Securities has called on Australian institutional investors to look beyond property as a passive investment and take a 'next-generation' approach to real estate investing.
RRS GPS Portfolio Manager Scott Crowe, in the country speaking with major Australian fund managers, said that property investment had changed dramatically and that commercial properties are now dynamic businesses that actively drive value-creation.
Resource Real Estate is a US-based investment management company which recently launched a joint venture with
Led by industry veterans Scott Crowe (New York) and John Snowden (Sydney), the joint venture offers local institutional investors access to quality global property security investments.
“Times have changed and as real estate companies have become more mature and dynamic. As such, the optimal approach to investment also needs to evolve. Rather than simply a static portfolio, real estate securities are actively managed and the focus of investors needs to be on the ability of a company to generate long term intrinsic value growth,” said Mr Crowe.
With the first phase of declining interest rates and stabilising fundamentals behind us, RRE GPS believes there has been a clear shift into the growth phase of the real estate cycle – as evident by improving global demand and limited new supply – delivering an opportunity for Australian investors to generate returns and earnings growth from global property securities.
A ‘next generation’ approach – taking in a combination of factors including the business model, quality of management and the asset itself – offers a unique opportunity for investors in this growth phase.
“We believe intrinsic quality will generate returns in this new world of real-estate investing. It’s increasingly important to look at factors like quality of the balance sheet and quality of management who can turn a B-grade property into an A-grade property, or enter a new asset class such as retirement homes,” added Mr Crowe.