There Is No Alternative?

Forecasters expect positive US commercial real estate capital appreciation in 2025 after two years of negatives signifying a cyclical turning point. The improvement is supported by ongoing solid US economic growth, near-target inflation and lower interest rates. Property sector fundamentals are positive as well except for the ongoing challenges in the office sector.

The US undoubtedly remains the dominant force in global markets, and for good reason. The economy is strong, and attractive alternatives – for now – seem few. Yet no narrative lasts forever, and it's especially important to question the narrative when a single thesis dominates.

Since LDI was recognized as a best practice for defined benefit plans, sponsors have evolved their investment strategies. Initially, they extended the duration of fixed income using longer duration benchmarks. The next phase focused on customizing Treasury and credit strategies to align with liability risk. Now, we are entering a new phase that asks, “How can we diversify our growing fixed income allocation?”

L&G through its dedicated US investment arm has acquired Arkadia, a premier apartment building located in the West Loop neighborhood of Chicago. This strategic purchase for its Institutional Retirement business marks a significant addition to the portfolio and underscores L&G’s commitment and track-record of investing in high-quality real estate assets on a global scale.

For the seventh consecutive year, LGIM America has been recognized in Pensions & Investments' Best Places to Work in Money Management program! Thank you to our employees for remaining committed to nurturing our collaborative, diverse, inclusive and client-centric culture, which makes this firm one of the best places to work.¹

Andrew Cater, Sabrina Ren and John Southall highlight how navigating interest rate risk in cash balance plans with floors is crucial for companies transitioning from traditional defined-benefit pension plans.