STRATEGY
EVALUATION
Lessons in Diversification from COVID-19
WHY REASSESSING YOUR PORTFOLIO IS NOT ENOUGH
by Steve Streetman
I
nvestors regularly reassess their portfolios and rebalance
have had on different sectors of real estate. Government-imposed lock- downs attacked small businesses in favor of large businesses. Large busi - nesses like Wal-Mart and Amazon were kept open – deemed essential – while small businesses that sold the same goods were forced to close. This meant that very large companies had a banner year and huge numbers of small businesses closed, many per- manently. The real estate occupied by those business that couldn’t pay their rent has also suffered.
Apartments have been the darling of real estate investors. They are the most easily understandable type of commercial real estate investment, and the sector has been extremely hot even during the pandemic. But what will be the result of continued eviction moratoria? Anecdotally we hear that good operators have gener- ally maintained rents. But as inflation runs rampant and workers continue to refuse to go back to work, how long will rents be maintained? Will the moratorium continue? If not, will
in order to achieve diversification. And many view this process as a way to tweak their portfolios, making small changes. But the last year has shown us how quickly macro-sized changes can occur. These events should encourage us to broaden our concept of diversification and look beyond niches to understand the large forces at work. Look at the huge impacts that the massive government interventions
56 | think realty magazine :: october 2021
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