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Trends Watch: April 19, 2018

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.  

This week, Elana talks to Asher Zamir, Founder/ Chairman/ CEO, Zamir Equities.

What is your outlook for real estate PE?

Real estate, as a sector, has had a strong performance and is an “investor favorite” as a result of a strong and an extended economic cycle since 2010. Our outlook for real estate private equity is positive. Real estate is embedded in the economy and, more powerfully, in people’s lives. Our buildings are where we live, work, and shop, and we depend upon functioning real estate. What is certain is that the focus on core assets and gateway markets has reached saturation or peak, and this is leading many institutions to go further out on the risk curve in search of better yields, which also means that there is a lot more competition chasing the same deals.

What is your outlook for the economy?

Our firm focuses on acquiring and managing suburban office assets. The performance of our product is highly sensitive to the U.S. economy. Real estate looks good right now because of the strong economy. However, slow growth in the economy is anticipated in the near future with the Fed announcing two rate hikes in 2018, and our view is that there might be some form of market correction or downturn within the next five years and a “rush to the exit” as this cycle unwinds. Consequently, we are acquiring assets with minimal tenant rollover within the first three years of new ownership to reduce our portfolio risk.

Why do you believe office spaces are the most attractive investment over residential?

We’ve built our company on the asset class we know best, which is office buildings. Office buildings can be very profitable, and long-term leases mean less management than with residential income properties. We like owning core, prized assets, and offices are generally viewed that way.

 

Elana Margulies-Snyderman is an investment industry reporter and writer who develops articles, opinion pieces and original research designed to help illuminate the most challenging issues confronting fund managers and executives.

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