David Phelps Quoted by Pensions & Investments on Real Estate Funds
Akin Gump real estate partner David Phelps was quoted by Pensions & Investments for its article “Real estate managers park assets in new investments,” on the search by real estate money managers for areas that will yield returns to investors in what the article characterizes as a challenging investment environment.
Phelps, who primarily represents private equity funds, capital markets clients and other institutional investors in real estate acquisition, development and financing, said that value-added and opportunistic funds can explore niches, noting, “Opportunistic and value-added funds ... can have a broader focus and investment strategy including assets to be repositioned or ‘out-of-favor’ or specialized real estate. In the end it's all about yield and returns.”
He added that interest in niche investments applies to general partners investing out of diversified real estate funds as well, as specialized funds often offer higher rates of return, although with greater risk. Phelps said, “The bottom line for all is that investors want higher yields out of real estate because they aren't getting it in their equity or fixed-income portfolios, so they are taking on more risk by engaging in varied strategies.”