January 26, 2023.
After searching for yield in private investments during an extended period of low interest rates, some investors are learning that illiquidity is more than hypothetical.
“It was a rate-driven bull market for real estate and for the credit associated with real estate, and that provided large returns for many years,” said Jamie Price, portfolio manager with Richardson Wealth in Toronto.
But as interest rates climb at a vertiginous pace, some private real estate funds have restricted redemptions. “I think we’re at the beginning of understanding how higher cost of capital is going to affect the business models that are behind some of these real estate projects,” Price said.