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Weekly CIO Commentary

A home for real estate in multi-asset portfolios

Saira Malik
Chief Investment Officer
Saira Malik photo

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Last week’s comments from the Fed seem to confirm that rate cuts are not coming any time soon.
CIO weekly commentary chart 2

Portfolio considerations


In our view, an allocation to real estate remains essential in a multi-asset portfolio. But choosing between public and private real estate exposure comes down to the specific role the allocation is intended to play. Publicly traded real estate investment trusts (REITs) have historically outperformed when equity markets are rallying, but also tend to exhibit higher relative volatility compared to the S&P 500 Index. Additionally, a REIT’s share price may trade at significant premiums or discount to its net asset value (NAV). For example, publicly listed REITs currently trade at a -13% discount to NAV, versus their long-term average discount of -1% (Figure 2). Moreover, while REITs have historically lagged broader equity markets during central bank rate-hiking cycles, they have also shown relative outperformance as visibility to the end of the cycles improved (as was the case in 2006 and 2018). Such periods typically coincide with a broader economic slowdown when REITs’ longer-duration cash flows find more favor in the market.

Private real estate offers the potential for attractive yields while offering diversification and uncorrelated returns during times of market turmoil, such as we saw during the Covid-induced recession and equity bear market. In contrast to public real estate, which is traded on stock exchanges where prices fluctuate daily, private real estate values are determined solely by observed, actual real estate transactions. As a result, private real estate typically experiences less volatility than its public counterpart, and tends to be less correlated to public equities.

We’re currently finding attractive investment opportunities in both public and private commercial real estate. The gaming sector, a relatively new public REITs category, offers above-average cash flows and dividend growth. Since 2019, this sector has generated high-single-digit rental and dividend growth, reflecting annual rent escalations on most leases. Consolidation within the gaming industry has also been a tailwind, with external growth driven by sale leaseback agreements with operators. The sector has also benefited from limited new supply given regulatory restrictions on the number of casino licenses and the significant capital requirements to build.

We’re also constructive on the industrial real estate sector in both public and private real estate. The sector is still being buoyed by e-commerce tailwinds, which should support urban logistics locations in growing metro areas of the South and West Coast. Additionally, supply chain diversification and nearshoring trends should boost demand for space at East Coast ports and U.S./Mexico border markets.

CIO weekly commentary chart 2
The industrial sector appears to be bright spots in both public and private real estate.

Nuveen’s Global Investment Committee (GIC) brings together the most senior investors from across our platform of core and specialist capabilities, including all public and private markets.

Regular meetings of the GIC lead to published outlooks that offer:

Related articles
Investment Outlook CIO commentary archive
Access previous issues of Saira Malik’s weekly CIO commentary on strategy and portfolio construction.
Weekly Fixed Income Commentary Treasury yields rise as the Fed holds steady
U.S. Treasury yields rose again on strong inflation data. The U.S. Federal Reserve kept interest rates unchanged as expected, but the guidance for future policy was more hawkish than anticipated.
Investment Outlook The Fed holds steady, but signals one more hike
The U.S. Federal Reserve kept interest rates unchanged at the September policy meeting, as expected.



All market and economic data from Bloomberg, FactSet and Morningstar. 

This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy, sell or hold a security or an investment strategy, and is not provided in a fiduciary capacity. The information provided does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on an investor’s objectives and circumstances and in consultation with his or her financial professionals.

The views and opinions expressed are for informational and educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as market or other conditions, legal and regulatory developments, additional risks and uncertainties and may not come to pass. This material may contain “forward-looking” information that is not purely historical in nature.

Such information may include, among other things, projections, forecasts, estimates of market returns, and proposed or expected portfolio composition. Any changes to assumptions that may have been made in preparing this material could have a material impact on the information presented herein by way of example. Past performance does not predict or guarantee future results. Investing involves risk; principal loss is possible.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. For term definitions and index descriptions, please access the glossary on Please note, it is not possible to invest directly in an index.

Important information on risk

All investments carry a certain degree of risk and there is no assurance that an investment will provide positive performance over any period of time. Equity investing involves risk. Investments are also subject to political, currency and regulatory risks. These risks may be magnified in emerging markets. Diversification is a technique to help reduce risk. There is no guarantee that diversification will protect against a loss of income. As an asset class, real assets are less developed, more illiquid, and less transparent compared to traditional asset classes. Investments will be subject to risks generally associated with the ownership of real estate-related assets and foreign investing, including changes in economic conditions, currency values, environmental risks, the cost of and ability to obtain insurance, and risks related to leasing of properties. Alternative investments are not appropriate for all investors and should not constitute an entire investment program. Investors may lose all or substantially all of the capital invested. The historical returns achieved by alternative asset vehicles is not a prediction of future performance or a guarantee of future results, and there can be no assurance that comparable returns will be achieved by any strategy.

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