The repricing of institutional property: From single digits to double-digit potential

If you are interested in institutional real estate, income-focused investing, and how professional investors are accessing property opportunities typically reserved for large institutions, then you will enjoy this conversation.

In this episode of The Rate of Change, Murdoch Gatti sits down with Ryan Bass, Founder of PanGen Capital, to discuss the repricing of institutional property and how capital is being deployed in a higher rate, more fragmented market environment.

Over the past two years, rising interest rates have reshaped the property landscape. Valuations have reset, capital has become more selective, and many investors have stepped back from the asset class.

But while sentiment has weakened, the underlying income story has not.

High-quality retail assets — particularly shopping centres — have proven more resilient than expected. Centres remain well occupied, tenant demand is strong, and trading conditions are healthy. At the same time, higher construction costs are limiting new supply, reinforcing the value of existing assets.

These dynamics are feeding directly into income.

Retail leases are often linked to CPI or turnover, allowing landlords to pass through rising costs while benefiting from tenant performance. In many cases, rental income has remained resilient and continues to grow despite broader market uncertainty.

This is where the opportunity is emerging.

Where institutional property once delivered mid- to high-single digit returns, parts of the market are now presenting the potential for double-digit return profiles — driven by improved entry pricing, durable cashflows and reduced competition.

Ryan explains why capital is rotating into retail, how office assets are becoming increasingly selective, and how his fund-of-funds model provides access to institutional-grade opportunities — including exposure to the Dexus Wholesale Property Fund and leading institutional retail property vehicles such as GPT Wholesale Shopping Centre Fund, Lendlease APPF Industrial Fund, Dexus Wholesale Shopping Centre Fund and Mirvac Wholesale Office Fund — that are typically inaccessible to most investors.

He also reflects on how the strategy has evolved from a focus on defensive income to capturing a more compelling return profile without necessarily increasing risk.

Key themes discussed:

• How the rapid rise in interest rates has driven a repricing across institutional property, resetting valuations and shifting return expectations

• The transition from a low-cost to a higher-cost capital environment — and how this is flowing through to pricing, liquidity and transaction activity

• Why return profiles are expanding from mid-single digits to potential double-digit outcomes, driven by lower entry prices and resilient income

• The growing disconnect between negative sentiment and the underlying strength of property cashflows

• Why high-quality retail assets, particularly dominant shopping centres, have proven more resilient than expected in the current cycle

• How strong occupancy, tenant demand and trading conditions are reinforcing the performance of well-located retail assets

• The impact of materially higher construction costs in limiting new supply and increasing the relative value of existing assets

• How CPI-linked leases and turnover-based rent structures are allowing landlords to pass through inflation and protect income

• The evolution of the strategy, beginning with allocation to the Dexus Wholesale Property Fund as a core holding

• The rotation of capital into retail through institutional vehicles such as GPT Wholesale Shopping Centre Fund

• How capital is being deployed across leading institutional platforms, including GPT, Lendlease, Dexus, Mirvac and Charter Hall funds

• The increasing bifurcation within office markets, with capital concentrating into high-quality assets while secondary assets face structural pressure

• The structure of PanGen Capital’s fund-of-funds model and how it enables access to institutional-grade assets typically reserved for large capital pools

• The differences between core, core-plus and value-add strategies, and how each fits within a diversified property allocation

• How capital scarcity and reduced competition are creating more attractive acquisition opportunities for disciplined investors

• The importance of manager selection, asset quality and structure when investing in private and unlisted property

• Why Australia remains an attractive location for overseas and domestic investor capital

• The role of institutional property within a broader portfolio, particularly for income generation and diversification

• How professional investors are positioning across real assets in a higher rate, more selective and opportunity-rich environment

Enjoy

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