CEO Al Rabil says the backdrop for this shift in allocations is a changing macroeconomic environment following a period of historically rapid rate hikes, with markets now entering what many expect to be a lower-interest-rate setting.
“People are starting to look at longer term trends, and these are generally longer duration assets. I think there's pretty strong consensus that we are entering a lower interest rate environment … there is some inflation, which is actually helpful for real estate and real assets - and across the board, real assets serve as an inflation hedge,” he said.
“We are in the very early innings of what I expect to be a long duration rotation of capital into alternative asset classes.”
Rabil said this shift carries significant implications for capital allocation, as investors seek alternatives offering both stability and growth, particularly in operationally intensive and demographically resilient real assets.
He noted that healthcare, student housing and senior living have long been under-allocated, leaving substantial room for strategic investment.
“Demographically driven or not, I think healthcare, real estate, student housing, industrial, and data centres … all of these asset classes will continue to see, I believe, a massive escalation and money flows,” Rabil said.
“I'm not saying they will receive it equally, but you're looking at massively under invested asset classes that have proven to be durable, not highly correlated to the macro economy, and from an investment perspective, they enjoy very long duration, demand trends.
Rabil observed that the COVID-related downdraft in office and retail accelerated this shift – and he said it's no longer a question of whether these asset classes will attract more capital, but how much and for how long the rotation will continue.
“It's going to take years and years to bring these asset classes into appropriate alignment from an overall capital investment perspective,” he told InvestorDaily.
“I don't find many investors who disagree with that thesis, or who aren't allocating in that way - that is the reality. We have to find other places to put money, and the logical places are where you're looking at demand trends that go out the next 20 plus years.”
In the Trump 2.0 environment, Rabil said investors are increasingly looking past the “everyday chaos”.
“We sort of live in an environment of escalated volatility that I don't think is going away anytime soon. Our job is to drown out the noise, play the longer game and lean in when those times of volatility create fear and opportunities for us to invest and be very judicious in times where there is excess liquidity and any difficult pricing environment from an origination standpoint.
“I would say at this moment in time, there is more capital availability and very efficient pricing - which makes it difficult to allocate significant sums of money at appropriate return and risk levels.”
However, Rabil said the opportunity is not equally accessible to all investors, as these sectors require deep operational expertise and extensive market knowledge.
Simply having capital is not enough, he said, with differentiation coming from the ability to execute at scale, build strategic relationships and optimise operations.
“While intuitively, you would think more capital equals more competition. Generically speaking, at the margins, there may be more competition. But the reality is that these are operationally intensive asset classes that require operating expertise and knowledge - so you don't have a level playing field from an acquisition perspective,” Rabil said.
Rabil was in Australia from the US meeting with local investors who, in his view, are focused on domestic political dynamics, housing affordability and how regulatory settings may shape investment conditions.
“I think Australian investors remain sanguine and pretty bullish on investment prospects in the United States and very specifically in asset classes that are going to enjoy long duration growth dynamics.”
