Arbitrage opportunities in commercial property
Gerald doesn’t sleep well because he’s always alert to market opportunities. He’s willing to transact in the middle of the night, seeking out small gains, sometimes with little risk. While he doesn’t sleep well, he sure has the money to eat well.
We didn’t catch this guy’s name.
He appears to be less flexible and prefers to follow a ‘steady-as-she-goes’ approach to investing. He sleeps really well, but because he doesn’t benefit from some of the opportunities that Gerald identifies, he has less money and doesn’t eat as well.
Which type of investor are you?
Investing in commercial property or infrastructure assets is a long-term game, and there’s no single strategy that always wins. However, at times, market distortions create opportunities for those with a little flexibility in their investing tool kit.
Following the sell-off in listed property securities since the beginning of 2022 (largely in response to rising interest rates), listed property provides investors with an exposure to commercial property at a substantial discount to very similar exposures in less liquid alternatives.
As Gerald identified, if you’re allocating capital to property, this current opportunity must surely be worth considering.
Like most market dislocations, these opportunities arise because different investors are driving different markets, and it takes time for arbitrages to close.
The following are some examples of investments that the Cromwell Phoenix Property Securities Fund has benefitted from in the past and some lessons to learn.