STRATEGIES FOR DIVERSIFICATION IN EXISTING REAL ESTATE PORTFOLIOS by

Diversification within real estate has become increasingly important with the growth of institutional investors in the real estate investment community. While traditional real estate investors understand perfectly well the benefits of maximizing return and minimizing risk for each acquisition, institutional investors require that returns be reached with minimum risk at the portfolio level. Investment managers need to be able to quantify their return results in a fashion that is compatible with the portfolio theory approach of the institutional clients. The key is to identify which model of diversification is appropriate for "true" diversification as well as the most practical to implement given the unique characteristics of the manager and their fund. Moreover, the manager must have a clear understanding of how their strategy fits into the larger diversification considerations of their client. In thi