Pension funds, insurance companies and opportunity funds are expected to increase their investments in real estate — targeting equity investments and mezzanine debt — in the second half of 2003. That’s the word from Stan Ross, chairman of the board of the University of Southern California Lusk Center for Real Estate.
“While foreign investment in U.S. properties could decline in the second half, institutional players will step up their investments as they continue to diversify their portfolios and meet allocation guidelines,” he said. “Investors are betting that many commercial property markets are nearing the bottom of the cycle and could begin to recover next year.”
Ross also noted that transparency of reporting is helping investors and that advances in technology will increase it. “Rating agencies will expand their coverage of real estate as technology continues to evolve and companies put more transparent reporting into place,” he said. “Investors will be better able to evaluate, rate and underwrite real estate financing transactions. This will result in pricing of real estate assets and securities that better reflects the underlying risks.”