Global economic uncertainty is providing an opportunity for investments in US alternative real estate, including outpatient medical office and seniors housing, as they are resilient to broader macroeconomic cycles, said Al Rabil, CEO of Kayne Anderson and CEO & co-founder of Kayne Anderson Real Estate.
The US Federal Reserve is expected to further cut interest rates, but the easing is unlikely to increase the new supply of the needs-based sectors in the near term, despite growing demand, Rabil told The Korea Economic Daily.
“Economic uncertainty creates opportunity. Constrained supply enhances the opportunity set of existing assets, and you can’t come close to replacing these assets at anywhere near the cost basis at which we’ve been acquiring them,” Rabil said in an email interview.
“While others may fear uncertainty, we’ve been preparing for this dislocation to arrive. We’re ready to capitalize on the opportunity, having deployed significant capital over the last 18 months to position our portfolios for what’s ahead.”
The global economy is facing symptoms of a potential economic downturn as the world’s two largest economies, the US and China, engage in high-stakes trade negotiations.
The Fed sees a single rate cut in 2026, following three cuts this year. But the easing is not predicted to boost new construction anytime soon, Rabil said.
“Even if capital becomes somewhat cheaper, I don’t expect a flood of new supply in the near term. For existing assets, that supply constraint supports occupancy and rent growth,” he said.
New development has already been slowed due to COVID-19, higher-for-longer interest rates and economic uncertainty, Rabil said.
“This has led to a lack of liquidity and inability to get construction loans, sending us back to 2010 levels of new development in off-campus student housing, seniors housing, medical offices and many other real estate sectors,” he said.
BUYING OPPORTUNITIES
The downturn created investment opportunities for Kayne Anderson, which seeks sectors with rising demand, falling supply, and long-term demographic demand trends, Rabil said.
“Today’s buying opportunity should last another 12-24 months when you look at historic and present-day interest rates,” he said.
“In opposition to that, three to seven years from now, there will probably be an outsized selling opportunity for assets acquired or built during this timeframe because I think we’ll be in a lower interest rate environment.”
The real estate investment veteran advised against waiting too long and missing out, however.
“Waiting until valuations settle means you’ve already missed the best opportunity to invest,” he stressed.
“I understand the human instinct is to wait for the all-clear, but our platform’s nearly 20-year history proves that dislocation can create the most attractive entry points.”
BULLISH ON NEEDS-BASED SECTORS
Rabil expects needs-based sectors in the US, including medical offices, seniors housing, off-campus student housing and light industrial, to outperform office and retail assets during economic downturns and over the long term. Alternatives have outperformed traditional asset classes since the global financial crisis.
“These asset types are demographically driven and do not correspond to larger, macro-economic trends,” Rabil said, referring to needs-based real estate. “These are sectors where demand stays prevalent during good times and in economic downturns when people cut discretionary spending.”
The US population aged 65 and older is projected to grow 45% to approximately 81 million by 2040 from 2020, Kayne Anderson said, citing US Census Bureau data.
“They may not have the funds to buy a new TV or a new car in times of economic hardship, but they won’t be able to avoid spending on a healthcare issue,” Rabil said.
The outlook for some assets, such as off-campus student housing, is also bright, given the growing demand amid falling supply, he added.
Earlier this year, Kayne Anderson held a final close on its second opportunistic debt fund, securing nearly $1.7 billion and beating the target of $1.5 billion. Additionally, as of Oct. 31, 2025, the firm has already deployed $5.2 billion in gross transactions on the equity side of the business, across over 170 properties.
Following is a full text of the interview with Kayne Anderson CEO Al Rabil:
Q. How do you expect the US and global property market to fare amid current slower economic growth and tariff uncertainties? What are the key opportunities and risks in the US and global real estate?
A. This environment is beneficial to us. Market volatility, the commercial real estate dislocation caused by the sharp move up in interest rates and corresponding cap rate expansion, as well as higher-for-longer interest rates, have created pain points, which result in a buying opportunity for us. We invest in alternative sectors largely because these sectors are not highly correlated to the macroeconomy and can thrive in times of dislocation.
There are many risks to investors because of this noise. I think the threat of tariffs comes front-of-mind to many. In the short term, tariffs increase pricing for many supply chain items, like copper, aluminum, and lumber, which decreases new supply activity. But, to us, tariff uncertainty creates opportunity. Constrained supply enhances the opportunity set of existing assets, and you can’t come close to replacing these assets at anywhere near the cost basis at which we’ve been acquiring them.
The better prepared you are, the better results you are likely to achieve. It is all about addressing reality, and the reality is, get comfortable being uncomfortable. While others may fear uncertainty, we’ve been preparing for this dislocation to arrive. And we’re ready to capitalize on the opportunity, having deployed significant capital over the last 18 months to position our portfolios for what’s ahead.
Q. You said we are going directionally to a lower interest rate environment. Will that boost the global and US property sectors? Will that increase the supply of new homes and lower rental growth?
A. Entering an easing cycle is positive for real estate.
But new development has already slowed due to years of higher rates and construction headwinds. In medical offices and seniors housing, starts are far below historic averages. That means even if capital becomes somewhat cheaper, I don’t expect a flood of new supply in the near term. For existing assets, that supply constraint supports occupancy and rent growth.
Today’s buying opportunity should last another 12-24 months when you look at historic and present-day interest rates. In opposition to that, three to seven years from now, there will probably be an outsized selling opportunity for assets acquired or built during this timeframe because I think we’ll be in a lower interest rate environment.
Q. Which assets in the US and global property markets do you think will perform better or worse?
A. To us, inelastic needs-based sectors continue to stand out. We invest in medical offices, seniors housing, student housing and now light industrial, largely because these asset types are demographically driven and do not correspond to larger, macro-economic trends. These are sectors where demand stays prevalent during good times and in economic downturns when people cut out discretionary spending.
For example, millions of Americans will be older than 65 in the coming years, and this group visits doctors far more often than younger Americans. They may not have the funds to buy a new TV or a new car in times of economic hardship, but they won’t be able to avoid spending on a healthcare issue.
On the other hand, sectors tied to the macroeconomy, like certain office and retail assets, face more headwinds. Hence, sectors like offices take a big hit when calamities like COVID-19 come along.
Q. How do you see the valuations of the US and global property markets? Do you think they are low enough to attract new investments, or will they fall further?
A. We’ve seen valuations already adjust significantly across many parts of the market. Whether they move further will depend on the pace of rate changes and broader economic growth. However, waiting until valuations settle means you’ve already missed the best opportunity to invest.
Q. In June, Kayne Anderson Real Estate secured nearly $1.7 billion for a new opportunistic debt fund, which was more than your target despite the recent challenging fundraising environment. What are the implications?
A. For us, it has been a challenging but constructive fundraising environment, and it reflects two things.
First, investors are confident that we can navigate dislocation, and they want to partner with managers like us who have a long track record in specialized sectors. Second, we are seeing a growing appetite for credit strategies that can provide certainty of closure when capital is tight. We designed that fund to capture attractive, risk-adjusted returns.
Q. Which sectors will you invest in with the fund? Could you explain why you want to spend the money on the sectors, please?
A. Our second opportunistic debt fund will remain focused on our target sectors where we have years of expertise: medical offices, seniors housing, student housing, and multifamily housing, along with self-storage and select industrial.
Again, these are asset types where demand is driven by demographic population characteristics, and because we lend in the sectors in which we invest on the equity side, we understand what it takes to be successful and can perform equity-like underwriting for debt assets.
Q. Kayne Anderson focuses on the US market. Why are you concentrating on the market? What are the key advantages of the US market compared to other countries and regions?
A. We’re concentrated in the US because it is the most scalable and the most resilient real estate market in the world.
One of the most important reasons for us investing only in the US is the aging demographics. The US population is quickly aging, and we will have nearly 11,000 Americans turning 65 every day for the next 20 years. Additionally, the 80+ population is projected to nearly double by 2040.
This dynamic is what drives medical offices and senior housing, as the 65+ population visits the doctor nearly three times more than those under 65, and 80+ is the age when many Americans move into seniors housing. You cannot replicate it this exact way in any other country.
In addition to those demand tailwinds, there are significant supply tailwinds in the form of constrained new supply for several reasons: the pandemic, rising interest rates, and economic uncertainty. This has led to a lack of liquidity and inability to get construction loans, sending us back to 2010 levels of new development in off-campus student housing, seniors housing, medical offices and many other real estate sectors.
But the distinguishing factor we focus on to choose where we invest is escalating demand. Escalating demand, plus diminishing supply, equals a market where the confluence of events has set Kayne Anderson up with an incredibly outsized buying opportunity.
We are very bullish about these alternative property types in the US, and investors recognize these are large, historically recession-resilient, high-quality sectors that enjoy the dynamics we’ve been discussing here.
Q. Will you consider investing outside of the US? What conditions do you need to consider investment in other countries?
A. Our focus is on the United States, where we’ve built and scaled our platform to $18 billion in assets under management. That said, Asia — and Korea in particular — is very important to us when it comes to partnership.
Last year we brought on Nick Lee as managing director and head of Asian real estate business development. Nick is fluent in both English and Korean, and he is constantly working to strengthen relationships with investors across the region. We’re building long-term partnerships with some of Korea’s largest institutional investors, who are looking to deploy capital in the United States and in demographically driven sectors.
Q. Kayne Anderson is a global leading alternative company, yet it is relatively unknown in South Korea. Could you briefly explain your company? What are the key strengths of Kayne Anderson? Why do you think Korean limited partners should invest in the US property market with Kayne Anderson?
A. I co-founded Kayne Anderson Real Estate in 2007 to focus on investing in the alternative real estate sectors that have the following characteristics: structural demand growth, highly fragmented, require operational expertise and are non-correlated to the broader economy, i.e., not dependent on GDP growth for rental growth. That has led us to become the premier players in medical offices, student housing, seniors housing, light industrial and attainable housing.
These sectors are often underinvested, and Kayne Anderson Real Estate has significant competitive advantages, including sourcing, financing, operating and exiting. The thesis is simple – use our sourcing to buy properties at below market rates, bring our operational expertise to those assets, aggregate those assets and sell them to buyers looking for institutional quality, scalable portfolios in our sectors.
During the early days when we were coming out of the global financial crisis, investors were more focused on the traditional sectors – multifamily, office, retail. The alternative sectors were often underinvested, even though those alternative sectors have consistently outperformed the traditional sectors on an NOI growth basis.
So, when we began, we set out to educate the LP community about our sectors and why the supply/demand fundamentals were so compelling and why these sectors would outperform. Nearly two decades later, we have had tremendous success, as many investors around the globe are now looking to rotate into our sectors of medical offices, student housing and seniors housing and view Kayne Anderson Real Estate as the leading operators in these sought-after sectors.
By demonstrating a track record of strong risk-adjusted returns and the historical resilience to economic downturns and lower volatility, we are attracting new investors to our sectors and Kayne Anderson is becoming better known around the world.
Our greatest strength is discipline. We lean into uncertainty and invest in demographically driven sectors with inelastic demand characteristics.
I think we’re in the early stages of a continued significant rotation of capital into these sectors to the point where, in the next five to 10 years, our target sectors could be considered more traditional, core real estate, and Kayne Anderson is ahead of the curve in these sectors.
Q. What advice would you give to South Korean investors?
A. Instead of giving advice, I’m more focused on stressing the opportunity set in front of us. I understand the human instinct is to wait for the all-clear, but our platform’s 20-year history proves that dislocation can create the most attractive entry points.
For Korean investors, US alternatives offer diversification and scale in markets that are supported by long-term demographic trends with significant downside protection while still producing outsized risk-adjusted returns. The light bulb has been turned on, and investors are starting to recognize the strong risk-adjusted returns that property sectors with long-duration demand tailwinds have to offer.
The opportunity is now.
Jennifer Nicholson-Breen edited this article.
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