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Eight ways to generate returns in a tough market
With rising market volatility and the current economic upheaval, many investors worry about achieving their goals for growth and income from their real estate investments. Good news: Nuveen relies on more than 600 real estate professionals in more than 25 offices around the world to seek out returns, even in challenging times. Our team is engaged in everything from sourcing new acquisition opportunities, managing leases and financing, to maintaining and enhancing the properties we already own.
Even in a market where overall price support is lagging, our teams can help generate outperformance.
As investors, we look for properties that have potential for price appreciation, which sometimes means buying properties that need renovation or improvement. For example, in the industrial warehouse sector, older facilities may not be suitable for the modern automated warehouses in high demand by logistics tenants. In this sort of situation, we can generate returns by enhancing properties through renovation.
We may look for micro-locations where the demand for products, such as multifamily properties, exceeds supply. In these cases, our local teams may partner with a developer to build and lease new space at premium rents.
Our local teams work closely with tenants in our properties to negotiate leases, provide service and cultivate high-quality relationships. This allows us to attract and retain tenants with longer lease terms, maintain high occupancy, diversify our tenant base and transition through any lease terminations while minimizing lost revenue.
Tenants and investors are interested more than ever in environmentally sustainable buildings. Our team of ESG specialists ensures that we are at the forefront of this critical trend. For example, by adding high-quality solar power grids, or other smart environment-enhancing technology, we can increase the value of a property and generate returns for investors through higher rents or operating cost savings.
Our technology and innovation team ensures that our properties utilize the most cutting-edge systems. In a post-COVID world, touchless entry systems and highest quality air purification systems are emphasized, resulting in properties with greater appeal to, and a healthier work environment for, workers and tenants.
Local access and expertise
Our central research team works with local in-market teams to identify locations poised to outpace the market based on long-term trends, such as demographics, technology and climate change mitigation. This allows our investment teams to focus on resilient cities and target micro-location opportunities within those cities. In addition, as a large-scale investor, our teams can access off-market deals, thus helping us generate income opportunistically.
As one of the largest global lenders and borrowers, our capital markets teams understand financing market trends and can source and implement prudent financing on the properties we buy and own. Our attractive interest rates and structures help to enhance investment returns.
Returns from properties are not solely a function of the rental income. Indeed, returns are negatively affected by capital expenditures and operating expenses. Given our experience and scale, we understand which capital expenditures will optimize the revenue on a property and we can minimize operating costs, leading to higher “take-home” returns.
In this issue
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 is no guarantee of 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.
A word on risk
Real estate investments are subject to various risks, including fluctuations in property values, higher expenses or lower income than expected, and potential environmental problems and liability. Please consider all risks carefully prior to investing in any particular strategy. A portfolio’s concentration in the real estate sector makes it subject to greater risk and volatility than other portfolios that are more diversified and its value may be substantially affected by economic events in the real estate industry. International investing involves risks, including risks related to foreign currency, limited liquidity particularly where the underlying asset comprises real estate, less government regulation in some jurisdictions, and the possibility of substantial volatility due to adverse political, economic or other developments.
Nuveen provides investment advisory services through its investment specialists.