Hazelview's Samuel Sahn says pensions need public REITs and active management is the key to unlocking their full potential
Each month at BPM, we offer a slate of articles and content pieces that go deep on a particular topic. This month, we're exploring alternatives as an asset class, with a focus on infrastructure in institutional portfolios.
Canadian pension plans and endowments have notably poured capital into private real estate for years. But that heavy tilt may be leaving money and diversification on the table, according to Hazelview Investments’ Samuel Sahn.
The managing partner and portfolio manager at Hazelview argues that long-term allocators need to rethink the balance between public and private real estate. The case isn’t that pensions should abandon private holdings. Rather, Sahn contends that ignoring public REITs creates blind spots in portfolios that are supposed to be built for resilience.
"It's both a diversifier and an alpha generator," said Sahn. “If you think about private real estate, you're getting exposure to one particular property type or geography. If you invest in a fund, the fees for that private real estate exposure is higher, the illiquidity is substantially higher, and the diversification is lower. When you think about public real estate, you have lower fees, more diversification, and better liquidity. So right there and then, public offers several distinct advantages over private. There is a place for both in an institutional investor portfolio, for sure.”
While Sahn underscored that every real estate allocation should include a public component, the exact weight will differ by investor. In practice, he admits he's seen allocations span from low single digits up to roughly a third of the portfolio. While one persistent objection is volatility as public REITs trade daily, that mark-to-market visibility can make investment committees uncomfortable. Yet, Sahn dismisses that concern.
"While it does have more volatility on a daily basis, and that is something investors have to be comfortable with, when you look out over the longer term, from five years to 15 years, public real estate performs similarly, if not better than private, but with more diversification and better liquidity," he says. “From our lens, having public be part of that portfolio is a good asset allocation decision.”
The active management factor
Sahn attributes much of public real estate's strong performance to active management. According to Hazelview's recent white paper, active global REIT strategies outperformed passive by 151 basis points annualized over 15 years, while delivering higher return-to-risk ratios and lower standard deviation.
Active strategies also have the flexibility to invest in real estate companies that are not structured as REITs and therefore excluded from major global indices, opening up an additional source of alpha when those names outperform the benchmark.
Notably, REITs are no longer just a property play. The asset class, once confined to residential, commercial and industrial real estate, began expanding into infrastructure in the early 2000s with the arrival of telecom-focused REITs in the US. That expansion has since stretched into energy grids, data centres, transportation networks and renewable energy, as investors look for more diversified sources of steady income.
What strengthens Sahn's case is the geography and property-type dispersion that active public REIT managers can exploit. In 2025, the gap between the best- and worst-performing countries has been vast. Year-to-date, Asia has led the pack, with markets like Japan (up 34.9 per cent), Hong Kong (up 26 per cent) and Singapore (up nearly 12 per cent) far outpacing the global real estate benchmark. Meanwhile, European REITs are flat and the US is up about three and a half per cent, Sahn noted.
“You have almost a 35-percentage spread between the top and bottom performer by country. That is a significant delta by which active managers can take advantage of," said Sahn.
He acknowledged a similar story is playing out across property types where healthcare, commercial offices, regional malls and industrials have delivered strong returns, while life sciences, cold storage, data centres and US single-family rentals have dropped sharply. The spread between the best and worst property types is well over 50 percent.
Sahn emphasized the ability to reallocate capital dynamically across both geographies and sectors, instead of being locked into fixed benchmark weights, is a key reason active real estate funds have outperformed passive vehicles over time.
To that end, he argues that active management in REITs is compelling because skilled managers can spot and back real estate trends that translate into stronger company-level performance. When managers help drive cash flow, revenue and earnings beyond what the market expects, they trigger upgrades to earnings and cash-flow forecasts, push up net asset values per share and support higher dividends, which in turn feeds through to stronger share-price returns.
But just as important, active managers can sidestep property types and regions suffering from oversupply, a drag that passive indexes are forced to hold. Together, targeted stock and sector selection plus the ability to avoid structurally weak areas explain why active REIT strategies can beat passive vehicles over time, noted Sahn.
According to Sahn, the real test of an active REIT manager is not just how much return they generate, but how efficiently they do it. He focuses on standard volatility, Sharpe and Sortino ratios, and active share to judge whether a manager is truly adding value relative to the benchmark. Sahn suggests a portfolio that owns only a couple of names might beat the index in one period, but it is taking outsized concentration risk across geography, sector and individual securities.
What he ultimately wants to see is a portfolio that is diversified yet still built around the manager’s highest‑conviction ideas, so that risk-adjusted returns improve rather than just raw performance.
“When we look at designing portfolios and constructing strategies for our clients, we're looking at not just the return, but also the risk we take. And we have developed lots of risk models, like country risk models, company risk models. That help us guide to how much risk we're taking. What we're trying to deliver at the end of the day is a better risk return profile. And if we can do that, then we will be successful in achieving our investment objectives and the client's investment objectives, most importantly,” said Sahn.
