CRE
We are at a pivotal moment for Europe, supported by structural reforms and macro catalysts. While expanding credit markets and lower rates favor Private Equity over Private Credit, opportunities vary by segment. Large+ Buyouts are attractive as markets have priced in structural challenges. We downgrade Europe Private Credit, remain neutral on Europe Private Equity broadly but overweight Europe vs. North America in PE portfolios.
This is the time of the year when strategists are busy sending out their annual outlooks. Here on the Global Investment Strategy team, we decided to go one step further. Rather than pontificating about what could happen in 2025, we decided to harness the power of the multiverse to tell you what did happen (in at least one highly representative timeline).
Next week, please join me for a Webcast on Tuesday, December 17 at 10:30 AM EST (3:30 PM GMT, 4:30 PM CET) to discuss the economy and financial markets.
And with that, I will sign off for the year. I wish you and your loved ones a very happy and healthy 2025. We will be back in the first week of January with our MacroQuant Model Update.
We project US Multifamily cap rates to increase from 5.2% to 6.5%. While we find an unfavorable risk-adjusted return on the asset, especially relative to other opportunities in CRE, cap rates are moving closer to peak.
Investors should be tactically tilting allocations towards Direct Lending, Distressed Debt, and Directional Hedge Fund strategies at the expense of Real Estate, Private Equity, and Diversifier Hedge Funds. Structural opportunities are emerging in Real Estate and Venture Capital.
This week we are sending you a Style Chart Pack, which now includes a standalone macro section, as well as macro, fundamentals, valuations, technicals, and uses of cash charts for the S&P 500, Defensives vs. Cyclicals, Growth vs. Value, and Small vs. Large. In the front section of this publication, we will review recent equity performance, and attempt to answer real estate sector-related questions that are foremost in investors’ minds.