On December 6, Nat Kellogg, CFA, President and Director of Manager Search, was quoted in a Wall Street Journal article on recent investor queues to pull money out of real estate funds, reflecting the impact of interest rate hikes on the commercial property sector: “Investors Yank Money From Commercial-Property Funds, Pressuring Real-Estate Values.”
Nat was quoted on the potential ramifications of such withdrawals for real estate funds and why certain investors are particularly pressured to sell. As written in the article,
“(…)if the number of investors asking for their money back keeps growing, it would likely become a problem for the real-estate market. That is because funds that need to raise cash to pay back their investors often have no other choice but to sell buildings.
“That puts pressure on prices overall,” said Nat Kellogg, president and director of manager search at investment adviser Marquette Associates.
Mr. Kellogg said a growing share of the pension funds and university endowments his firm advises are looking to pull money out of real-estate funds.”
Nat explained that although stocks and other markets are down, real estate fund valuations have remained high, which has shifted some investor allocations to real estate out of their target ranges. Rebalancing back to that target range is what prompts the withdrawals covered in the article.
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