Allstate Shifts to Entity-Level Investments

NORTHBROOK, IL—Allstate Investments is turning to entity-level investment, shifting its focus from commercial properties to the operating companies behind those assets, PERE reported. The rationale for the change is that property-level investments no longer generate the necessary levels of returns.

“The day of the asset play is over,” Edgar Alvarado, group head of real estate equity at Allstate Investments, told PERE. “If you go after an asset in the market, call it a multifamily complex or an office building, 95% of the time it's going to be an auction and you're just going to be highest bidder. I don't feel that's the right way to make money anymore.”

PERE reported that among Allstae's major initiatives in this regard is making private equity-like investments in operating platforms, where the company can provide capital to help grow the business. The insurer has not set an allocation for such investments, but will instead execute on a deal-by-deal basis. To that end, Allstate recently made its first entity-level investment in TruAmerica Multifamily, a Los Angeles-based investment firm focused on the western US.

Allstate joined TruAmerica, a partnership that was founded last year by the Guardian Life Insurance Co. and industry veteran Bob Hart, in acquiring a 1,514-unit apartment portfolio in Colorado and Washington for $224 million. Click here for the complete report in PERE.