Is Real Estate Real?
In this case a consultant to pension funds ponders the unique opportunities and risks she faces as she considers adding real estate to the fund's portfolio for the first time. While the fund already owns REITs, its trustees believe that direct real estate investment could offer protection against the threat of inflation. But the category of real estate includes a wide range of distinct subclasses, including office, retail, industrial, hotel, and rental apartments. In analyzing the situation, students must determine which of these sectors provides the best hedge against inflation, and the risks and returns of the asset class as a whole.
Case id: 111704
Supplemental Materials: Teaching Note