Trends in Alternative Investment — Diversifying Your Portfolio in 20183.26.2018
By: Stephen Cassidy, President, Denholtz Associates
Traditionally, stocks and bonds have comprised a hefty percentage of the average investor’s portfolio. With their attractive liquidity and market breadth, stocks and bonds are seen as the versatile investments for portfolios of all types. However, the current low-interest rate environment has depressed yields in these traditional investment options and many investors are showing greater interest in alternative assets to help bolster their portfolios.
Given the current low yield environment, investors are rethinking traditional investment allocations and are exploring alternative investments such as private equity, hedge funds and commercial real estate. We are noticing a shift in alternatives allocation as more investors begin to see the potential benefits of these assets, most notably, those offered by real estate. As we look forward to the future, these tactics have the ability to aid investors in diversifying their portfolios and also serve as a better inflation hedge than traditional investments when interest rates inevitably begin to rise.
Why Real Estate?
Commercial real estate investments are becoming more and more attractive to investors interested in long-term growth. Although real estate values can fluctuate over time, over the long-term, real estate has been less volatile in comparison to traditional investments. Properly selected commercial real estate investments not only continue to generate a strong income but also have the potential for capital appreciation. Our team is highly-selective about our projects, consistently addressing market demand and tenant needs in order to target a high rate of projected return for our investors.
Similarly to stocks, investors exercise the freedom to invest in an array of diverse property types ranging from multi-family apartment communities, retail shopping centers, suburban or central business district office buildings, flex industrial parks to even more niche property types, like self-storage and malls. Each of these asset classes presents their own sets of risks and opportunities in much the same way as stocks. Some real estate investment firms might focus on one asset class or geographical region and others may have a much broader overall strategy.
At Denholtz, we take the later approach, focusing on a broad array of asset classes that all share one commonality – opportunity. Our expansive portfolio is made up of assets that we recognized as underperforming or value-add projects prior to our acquisition. Once acquired, we leveraged our 65 years of real estate experience and substantial in-house capabilities to unlock value where many others missed it. Our recent sale of 655 Howard Avenue in Franklin, N.J. highlights how we apply this strategy on a continual basis. We recognized a long vacant, blighted warehouse in one of N.J.’s emerging submarkets as an opportunity when so many other firms just saw a warehouse that was long past its useful life. It was this recognition that inspired us to purchase the property and renovate the building allowing us to negotiate a sale of the now-modern warehouse earlier this year. This deal delivered a significant return on our investment and showcased how our unique approach to real estate investment can deliver results back to our investors.
How Can Alternative Investment Options Help You?
As we look ahead towards an uncertain financial marketplace, it is important to consider real estate as a viable alternative investment that will improve your portfolio diversification and offer stability in the wake of the unknown. At Denholtz Associates, we strive to offer lucrative opportunities to our investors, evaluating market trends then investing in markets and asset classes where we see unique opportunities to deliver the superior, risk-adjusted returns upon which we have built our longstanding investment philosophy. Whether it is a luxury mixed-use project in Red Bank, New Jersey, a significant office building renovation in St. Petersburg, Florida or a brand-new retail development in Clark, New Jersey, we always seek to proactively find value and deliver it to our investors. By having our finger on the pulse of the latest trends, we anticipate the needs of different communities and invest in projects that will bring value to those markets as well as to our investors. Call me today at 732-388-3000 to learn more about real estate as an alternative investment and how the Denholtz difference can work for your investment portfolio.