Why Commercial Real Estate
Commercial real estate can serve as an integral part of many investors’ portfolios. Cole Capital believes net-leased real estate is one of the best long-term options when investing in commercial real estate. The potential benefits include:
- A relatively consistent stream of income
- Portfolio diversification through exposure to commercial real estate
- Reduced portfolio volatility through a low level of correlation
- The potential for capital appreciation
Benefit #1: A Stream of Income
Investing in commercial real estate can provide a relatively consistent stream of income through the rents collected from the properties.
An investor should consider diversifying their sources of income in the same way they diversify many other aspects of their investment portfolios.
As with any investment, there is no certainty that a Cole Capital REIT will achieve its objectives and as a result, no guarantee that shareholders will receive distributions.
Benefit #2: Portfolio Diversification
Adding commercial real estate has historically lowered portfolio volatility without sacrificing return1.
Commercial real estate investments traditionally have a low level of correlation compared to most other major asset classes. This may help diversify an investor's portfolio.
Potential investors should note that an investment in a Cole Capital REIT differs from a direct investment in commercial real estate in significant ways, including expenses and fees payable by the Cole Capital REIT, all of which lower returns.
Benefit #3: Reduced Portfolio Volatility
Commercial real estate has historically exhibited a lower level of volatility than most other major asset classes1.
Because investments in commercial real estate do not directly correlate with movements in the stock and bond markets, quality commercial real estate may help stabilize a diverse portfolio strategy.
Although there is no guarantee that this trend will continue, adding an asset class with lower volatility into a portfolio can potentially reduce the overall volatility of an entire portfolio.
Benefit #4: Potential for Capital Appreciation
Commercial real estate has historically provided an opportunity for capital appreciation over the long term1.
By acquiring only high-quality properties obtained through our disciplined acquisition process, we seek to increase the share price over the long term, thereby positioning the portfolio for maximum shareholder value. Typically, we structure the lease terms to help offset depreciation and hedge against inflation.