Several common themes have emerged when we have worked with clients on their investment process. Our first theme is on differentiating between two types of risks.

The first type of risk is of multiple potential outcomes around a common mean e.g., whether the lease is renewed or not renewed or whether the tenant defaults. The second type of risk is of a change in the underlying mean e.g., a change from a 3-month to a 15-month letting period or rental growth of 1% y/y versus 4% y/y. An investment process should clearly differentiate between the two.