MetLife CFO says ‘quality will win out in every class of real estate’

Asked during the Goldman Sachs Financial Service Conference about his view of the real estate markets and if there is anything the company can capitalize on within its asset manager or general account, MetLife CFO John Dennis McCallion replied in part: “I mean, higher rates certainly have been a headwind in terms of funding cost for borrowers. Office specifically has been a bit of a headwind just as a result of the evolution and how office is being used. Although we’re seeing some kind of small positive signs of that starting to reverse a bit, that pendulum swung pretty hard as a result of the pandemic. And we’re starting to see, and you can see it in the paper, firms start to revert back to some level of in office. And so that will be — that’s a positive trend for that. Look, I think capital is still scarce out there. Higher rates, as I said, kind of create a headwind. But that dislocation does create opportunities in other sectors within real estate… So these things go through cycles. It’s how we invest in this space. We assume they will go through cycles, which is why our philosophy is the way it is. And you need to find — needing to do so in a disciplined way so that when you get here, you can manage accordingly. Overall, we think quality will win out in every class of real estate.”