Legal & General and Schroders to Invest Hundreds of Millions in U.S. Real Estate, Steering Clear of Office Sector
In a strategic move, British investment giants Legal & General and Schroders are set to pour massive investments into commercial property in the United States. However, they are taking a cautious approach by avoiding the struggling office sector, as revealed to Multibagger.
With combined assets worth over $2.5 trillion, both fund managers have been bolstering their U.S. real estate teams in anticipation of a market recovery, fueled by declining interest rates. Legal & General's CEO, António Simões, highlighted the company's focus on expanding into the U.S. real estate market, citing strong fundamentals.
The aftermath of the pandemic has led to higher borrowing costs and a surge in remote working, impacting global property prices. The U.S. office market has been hit hard, raising concerns among investors about oversupply. However, hopes for further interest rate cuts following the recent 50 basis points reduction by the U.S. Federal Reserve have brightened the investment outlook.
Experts suggest that the U.S. real estate market has the potential to rebound quicker than its European counterparts, with lenders and developers swiftly repricing assets. Legal & General plans to boost its U.S. real estate equity and debt portfolios by hundreds of millions of dollars in the coming years, with a focus on rental homes.
Similarly, Schroders aims to expand its U.S. real estate equity portfolio significantly, eyeing opportunities in sectors like data centers and real estate debt. The company sees the normalization of interest rates as a catalyst for unlocking demand in the market.
Overall, both firms are optimistic about the U.S. real estate market's prospects and are strategically positioning themselves to capitalize on the evolving landscape. Investors should pay attention to these developments as they could present lucrative opportunities for growth and diversification in their portfolios.