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Going beyond location: Dealmakers use AI to structure radically new property portfolios
Investors are reassessing how and where value is created as capital, technology, and scale reshape global real-asset markets. Global capital flows are changing amid global tensions. Technology is deriving granular property insights that are altering valuations. And public-to-private real estate investment trust (REIT) transactions and industry consolidation are changing the face of the sector. In response, institutions are redefining portfolio strategy, deploying AI-driven data, and pursuing concentration for both operational efficiency and sustainable returns across an evolving landscape of real assets.
Capital allocation and real assets
Investors this year are confronting a new reality where capital is finite and increasingly selective. US capital flows this year are led by domestic investors who are taking the place of cross-border capital, which is more cautious amid trade and political uncertainty. Allocators, from funds to private equity managers, are recalibrating portfolios to balance diverging investor demand for either yield, liquidity, or asset diversification. Capital, once directed toward core real assets, is increasingly flowing into private credit and infrastructure, which more closely match investors’ yield and duration requirements. Institutions, meanwhile, are reexamining their capital sources and launching products designed to broaden access to a wider investor base. Regulatory shifts are a critical part of seeking out new investors as defined-contribution retirement plans may soon include private real assets, unlocking trillions in new fee-generating assets under management (AUM). Additionally, retail investors will look at real assets as an opportunity as lower barriers to entry allow a broadening of investor bases which will in turn support deal activity as sponsors anticipate a more robust fundraising environment and increased private capital deployment. Looking ahead, real assets’ share of portfolios may depend on their ability to demonstrate relative value and make the case for durable cash flows, inflation protection, and transparency within diversified portfolios.
AI and real assets
Real assets deals are being transformed by artificial intelligence (AI) by reshaping how investors source, value, and integrate assets. For example, advanced analytics and machine learning that synthesizes vast, previously siloed datasets such as tenant behavior, energy performance, zoning, and market sentiment, can identify mispriced properties and unlock new value. In due diligence, AI tools are accelerating underwriting and risk assessment, improving speed to close, and reducing transaction costs. Most notably, AI is driving the convergence of asset classes. As data centers, life sciences facilities, logistics hubs, and residential platforms increasingly rely on digital infrastructure and flexible use models, traditional sector lines are blurring. Investors are beginning to view portfolios through an operational and technological lens rather than by property type as they seek higher returns and better risk-adjusted performance. This convergence, powered by AI-derived insights, is enabling cross-sector platform deals and joint ventures that combine real assets with energy, data, and infrastructure—redefining how value is created across the built environment.
REIT concentration and consolidation
There is a growing wave of public-to-private REIT transactions (for example, Paramount Group, Plymouth Industrial REIT, City Office REIT), market consolidation (the merger of Anywhere Real Estate and Compass), and activist scrutiny (including Equity Commonwealth, Howard Hughes Holdings, Whitestone). Several factors are driving it: a disconnect between net asset value and market capitalization; the pursuit of scale; and a desire to reposition strategic and underperforming assets. Shareholder preference for larger REITs is also an important consideration. Top quartile REITs by enterprise value outperformed the bottom half by about 7% in total shareholder return (TSR) over a 10-year period, with the bottom half delivering negative TSR during that time. The distribution of the sector’s enterprise value (EV) is also highly concentrated. The top 10 REITs make up 44% of total EV versus only 7% for the bottom half. Smaller REITs also face balance sheet challenges that hinder their competitiveness, such as a higher percentage of SG&A costs, lower EBITDA margins, and a higher net debt to EBITDA ratio compared with large firms. Given there are about 180 publicly traded equity REITs, we anticipate consolidation and take-privates to continue amid changing market dynamics, operational pressure, and the preference among investors to put capital to work in larger firms.
Key M&A trends set to influence real assets
The return of selective capital
In the next six months, the real assets sector will continue to feel the effects of higher-for-longer interest rates and uneven global liquidity. Domestic institutional capital—particularly from insurance, pension, and private credit platforms—is expected to dominate activity as cross-border investors remain cautious.
Dealmakers should anticipate pricing bifurcation between trophy and non-core assets and structure transactions to emphasize duration, downside protection, and operating efficiency. With refinancing pressures mounting and credit markets selectively opening, structured capital solutions—including preferred equity and mezzanine debt—will feature more prominently in deal terms. Investors that can combine flexibility with speed of execution will be best positioned to capture mispriced opportunities.
AI-enabled value creation and asset convergence
AI is becoming a differentiator in sourcing, underwriting, and post-deal integration. Machine-learning models that analyze energy usage, tenant behavior, and micro-market performance are shaping valuations and revealing synergies across data-rich asset classes such as logistics, life sciences, and data centers. The result is the converging of real assets, infrastructure, and energy—where value lies in operational resilience, not just location. As sustainability reporting and carbon data become embedded in diligence, AI-driven tools should have the capacity to help buyers quantify operational efficiency and decarbonization potential—turning environmental, social, and governance compliance into a measurable driver of alpha.
Consolidation continues
Public-to-private REIT transactions and portfolio mergers are likely to dominate as listed valuations lag private-market pricing. What will drive those decisions are considerations of scale, governance credibility, and cost of capital. We expect further concentration at the top of the listed market, with the largest REITs capturing more and more investor inflows. For mid-cap players, strategic partnerships or spin-offs may offer the most viable path to competitiveness.
“Expect accelerated M&A as capital concentrates, AI exposes inefficiencies, and platforms converge—real assets are entering a new phase defined by intelligence, integration, and scale-driven opportunity.”
Tim Bodner,Global Real Estate Deals LeaderThe bottom line: What real assets and real estate dealmakers should watch in 2026
After a cautious first half, the second half of 2025 underscores that capital is flowing—but selectively. The deal environment rewards those who can combine data-driven insight with strategic conviction. For clients, the challenge—and the opportunity—is to navigate a landscape where liquidity, technology, and consolidation are redefining the meaning of value creation in real assets.
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