Real Estate

The Opportunity in Listed Commercial Real Estate

White Paper

May 24, 2023

It’s hard to look at the news lately without seeing a negative headline about U.S. commercial real estate. According to many of the headlines, U.S. commercial real estate is poised for a wave of defaults and valuation resets, and is likely to be a canary in the coal mine signaling potential danger ahead for financial markets.

Is the situation as dire as headlines suggest? We do not believe so. We do think that defaults are likely  to occur, but we do not expect them to be broad-based. In our view, the defaults will primarily be in challenged property sectors, such as office, or among properties experiencing asset-specific issues such as demand and cash flow challenges. Outside of sectors or assets facing these specific challenges, we expect any defaults that arise will be due to asset-level financing issues, such as high leverage levels and interest rate resets.

However, we find the vast majority of publicly traded real estate investment trusts (REITs) are much better positioned, with strong fundamentals, low default risk and compelling valuations presenting an attractive opportunity for investors.

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Disclosure Information

This material is not, and is not intended as investment advice, an indication of trading intent or holdings or the prediction of investment performance. All information is current as of the date of this material. Views and information expressed herein are subject to change at any time. Brookfield Public Securities Group LLC disclaims any responsibility to update such views and/or information. This information is deemed to be from reliable sources however, Brookfield Public Securities Group LLC does not warrant its completeness or accuracy. This presentation is not intended to, and does not constitute an offer or solicitation to sell or a solicitation of an offer to buy any security, product, investment advice or service (nor shall any security, product, investment advice or service be offered or sold) in any jurisdiction in which Brookfield Public Securities Group LLC is not licensed to conduct business, and/or an offer, solicitation, purchase or sale would be unavailable or unlawful. Indexes are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results.