Introduction: The Media's Real Estate Narrative vs. Market Reality.

If you've been keeping up with the news, the real estate market seems to be in
rough shape—headlines spotlight the uncertainty, focusing on the challenges
that dominate certain sectors. While there are real concerns to consider,
particularly in some submarkets and sectors, these headlines often miss a critical
shift: institutional investors are quietly making their way back to core real estate.
This movement not only challenges the negative media narrative but also
signals that now could be a prime moment for investors to rethink their real
estate allocations.

Institutional Investors as Early Movers

Institutional investors have historically played a key role in signaling market
recoveries. When they start moving, others tend to follow. So, the recent uptick
in Requests for Proposals (RFPs) from these investors is worth paying attention
to. After sitting on the sidelines for a while, institutional capital is now eyeing
core real estate once again.

Here’s why this matters: these large investors—pension funds, endowments, and
other major players—aren't just reacting to current conditions; we believe
they're anticipating where the market is heading. Privy to a wealth of
information, models, and data, these investors seek to capitalize on market
opportunities before broader trends emerge. The fact that institutional investors
are showing renewed interest, especially after a near 25% drop from peak
pricing, is a strong signal for those who may currently be underweight in real
estate. It suggests that the value opportunity is becoming too compelling to
ignore.

Core Real Estate’s Value Opportunity

One of the most compelling arguments for core real estate today is its relative
value compared to other asset classes. The sharp decline in pricing has created a
potential value buy for investors, particularly those who have been waiting for
more favorable entry points.

Core real estate—typically high-quality properties in prime locations with stable
income streams—has always played a key role in diversified portfolios. It offers the kind of long-term stability and growth potential that investors seek,
especially during times of volatility in other asset classes. And now, with capital
flows returning and more transactions taking place, we’re seeing the bid/ask
gap narrow between buyers and sellers. This improvement in market liquidity is
a strong indicator that the market is beginning to find its footing. It suggests
that pricing expectations between buyers and sellers are aligning, which is often
a precursor to a more active and healthy market.

Improving Market Liquidity: A Sign of Confidence

Another sign of recovery in core real estate is the reduction in redemption
queues for institutional real estate funds. In August 2024, a significant decline in
these queues signaled a shift in sentiment—investors are becoming more
confident in holding their real estate positions, rather than seeking liquidity at
discounted prices.¹

What’s driving the change? For one, fund managers are transacting more, which
creates liquidity in the market. In addition to this, some investors have rescinded
their redemption requests, recognizing that selling at current values would
mean missing out on the potential upside when the market fully recovers. This
combination of increased liquidity and renewed investor confidence paints a
positive picture for the future of core real estate.

Looking Ahead: The Case for Core Real Estate

While challenges remain, the overall fundamentals of core real estate—strong
rental income, stable demand, and improving liquidity—are showing signs of
recovery. Rental income growth, a key driver of real estate performance, is
showing signs of resilience, particularly in the multifamily sector, and as supply
and demand dynamics begin to rebalance, we expect to see even more progress
across the sector.

For investors who have been waiting on the sidelines, now may be the time to
take a fresh look at core real estate. Institutional investors, often at the forefront
of market shifts, are clearly signaling renewed interest, and the broader market
indicators point to a recovery on the horizon. With market fundamentals
stabilizing, that window of opportunity may be opening sooner than expected.
By positioning portfolios to capitalize on these trends, investors have the
potential to benefit from the upswing as core real estate regains momentum.

1) Source: IDR 

Important Disclosures

This information is educational in nature and does not constitute a financial promotion, investment advice or an inducement or incitement to participate in any product, offering or investment. Accordant is not adopting, making a recommendation for or endorsing any investment strategy or particular security or property mentioned in this article. All opinions are subject to change without notice, and you should always obtain current information and perform due diligence before participating in any investment. All investing is subject to risk, including the possible loss of principal. Accordant Investments, LLC (“Accordant”) cannot guarantee that the information herein is accurate, complete or timely. Past Performance does not guarantee future results.

Accordant has not made any representation or warranty, express or implied, with respect to the fairness, correctness, accuracy, reasonableness or completeness of any of the information contained herein (including but not limited to information obtained from third parties), and they expressly disclaim any responsibility or liability, therefore Accordant does not have any responsibility to update or correct any of the information provided in this article. 

All real estate investments have the potential for value loss during the life of the investment and the sponsor can make no assurances that any investment will achieve its objectives, goals, generate positive returns, or avoid losses.

Investors should carefully consider the investment objectives, risks, charges, and expenses of the Accordant ODCE Index Fund. This and other important information about the Fund is contained in the prospectus, which can be obtained online by visiting www.Accordantinvestments.com The prospectus should be read carefully before investing.

Past Performance is No Guarantee of Future Results.

Investing in the Fund involves risks, including the risk that you may receive little or no return on your investment or that you may lose part or all of your investment. The Fund’s investment objective is to employ an indexing investment approach that seeks to track the NCREIF Fund Index – Open End Diversified Core Equity (the “NFI-ODCE Index”) on a net-of-fee basis while minimizing tracking error. There can be no assurance that the actual allocations will be effective in achieving the Fund’s investment objective or delivering positive returns. It is not possible to invest in an index. You cannot invest directly in an index and unmanaged indices do not reflect fees, expenses, or sales charges.

The ability of the Fund to achieve its investment objective depends, in part, on the ability of the Adviser to allocate effectively the Fund’s assets across the various asset classes in which it invests and to select investments in each such asset class. There can be no assurance that the actual allocations will be effective in achieving the Fund’s investment objective or delivering positive returns. Limited liquidity is provided to shareholders only through the Fund’s quarterly repurchase offers for no less than 5% of the Fund’s shares outstanding at net asset value. There is no guarantee that shareholders will be able to sell all of the shares they desire in a quarterly repurchase offer. The first repurchase offer following the Conversion is expected to occur in February 2024. 

Additional risks related to an investment in the Fund are set forth in the “Risk Factors” section of the prospectus, which include, but are not limited to the following: convertible securities risk, correlation risk, credit risk, fixed income risk, leverage risk, and risk of competition between underlying funds.

Investors should consult with their selling agents about the sales load and any additional fees or charges their selling agents might impose on each class of shares.

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