Now may be a compelling time to rebalance from stocks into real estate.

Over the past several years, equities have delivered exceptional returns. Many investors have benefited from that momentum.

The question is: what do forward returns look like from today’s starting valuations?

I dunno. You dunno. No one knows.

BUT, starting valuations matter over longer horizons. Real estate, by contrast, is trading at more modest valuations in many segments of the market.

In some cases, stabilized assets are selling below replacement cost (meaning it would cost more to build the same property today than to acquire it). When that dynamic exists, new supply slows and long-term fundamentals can improve.

Beyond valuation, real estate offers structural tax advantages that stocks do not:

• Depreciation that can offset rental income
• Potential offset of other passive income you have
• 1031 exchanges that defer capital gains taxes

Private real estate also tends to behave differently than public equities, which can provide diversification benefits within a broader portfolio. (Positive in 7 of the last 8 years when stocks had a down year)

For investors sitting on large, appreciated stock positions, one thoughtful approach could look like this:

• Implement a tax-aware long/short overlay on the equity portfolio
• Systematically harvest losses to offset gains
• Gradually rebalance capital into private real estate

Instead of selling everything and triggering a large tax bill, the transition can be engineered over time with diversification and tax efficiency in mind.

1. Green Street Advisors, as of September 30, 2025. Reflects the Commercial Property Price Index for All Property, which captures the prices at which U.S. commercial real estate transactions are currently being negotiated and contracted. 6% reflects increase from November 30, 2023 trough.

2. S&P 500 reflects total gross return, as of September 30, 2025. Oct'22 Trough refers to October 12, 2022. Corporate bonds reflect the total return of the ICE BofA U.S. High Yield Index, as of September 30, 2025. Sep'22 Trough refers to September 29, 2022. During the period from September 30, 2022 to September 30, 2025, S&P 500 total returns were 95.0% and corporate bonds total returns were 36.7%. Comparisons shown are for informational purposes only, do not represent specific investments and are not a portfolio allocation recommendation. See "Important Disclosure Information-Index Definitions".