As the demand for sustainable investing grows, private mREITs are quietly adapting—here’s what investors need to know for 2025.
Alternative investment trends in 2025
As investors seek diversification, inflation protection, and stable returns, assets like private equity, digital assets, and mREITs are gaining attention.
While private mREITs offer income stability and inflation resilience, they also face challenges such as limited liquidity and fallout from interest rate increases.
Understanding how they compare to alternatives can help investors plan for long-term growth.
Let’s check out the alternative investments trends for 2025.
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Sustainability and ESG investments
Factors related to environmental, social, and governance (ESG) considerations are having a growing impact on investment decisions.
ESG-aligned funds direct investments into projects prioritizing environmental stewardship, social responsibility, and ethical governance practices that focus on providing sustainable and ethical returns.
ESG trends:
- In the real estate sector, sustainable investments—such as energy-efficient buildings and renewable energy infrastructure—attract substantial capital.
- Private funds focusing on net-zero developments and sustainable urban projects are well-positioned for long-term growth.
- Green bonds and impact investing are also gaining traction.
Some private mREITs can work within ESG requirements, presenting opportunities to align with sustainability initiatives.
For example, mREITs are beginning to finance energy-efficient developments or offer lending programs prioritizing green building certifications, appealing to ESG-conscious investors.
Growth in private equity and private credit
Private equity continues to dominate the alternative investment landscape, with significant capital flowing into the technology, healthcare, and renewable energy sectors.
It’s an asset class that can offer high returns and a low correlation to public markets, making it an attractive choice for diversification.
Private credit is also emerging as a compelling alternative to traditional bonds.
Investors seeking higher yields turn to private loans from mid-sized companies or real estate developers, which offer stable returns even in uncertain economic conditions.
Private mREITs share some characteristics with private credit funds, as both involve lending capital for high-yield returns.
However, mREITs focus primarily on real estate debt, often backed by tangible assets, providing an additional layer of security.
Technology-driven accessibility
Technological advancements make alternative investments more accessible through fractional ownership, blockchain-based assets, and crowdfunding platforms.
Blockchain and tokenization allow investors to buy into real estate with lower capital requirements, while crowdfunding reduces entry barriers for private equity and other assets.
Cryptocurrency and blockchain adoption
Cryptocurrencies and blockchain technology are becoming increasingly prominent in the investment landscape.
- While digital assets remain volatile, the application of blockchain in real estate is expanding.
- Tokenized real estate is one example of this shift. Using blockchain to enable fractional property ownership, funds can increase liquidity and lower transaction costs.
- In lending, blockchain-based smart contracts offer the potential to automate and streamline processes, reducing administrative burdens and enhancing efficiency.
Though private mREITs have been slow to adopt blockchain, the technology’s potential to improve securitization and transparency could play a significant role in the sector’s future.
Inflation protection through real assets
With inflation remaining a key concern in 2025, investors increasingly turn to real assets, which tend to preserve value better than traditional equities and bonds.
Real estate remains a popular inflation hedge, with property values and rental income rising accordingly.
Infrastructure funds, including toll roads, utilities, and renewable energy, also provide stable returns and protection against inflation.
Private mREITs fit well within this category. By generating income through real estate-backed lending, they have the potential to provide a reliable revenue stream that can help preserve purchasing power.
However, their reliance on interest rate spreads can make them vulnerable when borrowing costs rise faster than lending yields.
Comparing private mREITs to other alternative investments
Private mortgage real estate investment trusts (mREITs) will often stand out in the alternative investment space.
Their potential for consistent income generation appeals to investors seeking stability and diversification.
However, like any investment, private mREITs entail specific risks that need careful consideration.
Strengths of private mREITs
- High-yield income: Private mREITs offer above-average yields by investing in mortgage-backed securities and real estate loans. These returns often surpass traditional fixed-income options such as bonds and treasury securities.
- Real estate-backed security: Unlike equities, private mREITs are tied to physical properties, providing collateral that helps mitigate risk. This stability allows mREITs to generate income even during economic downturns, as long as the underlying loans remain sound.
- Insulation from market volatility: Private mREITs are not publicly traded, meaning their valuations are less affected by daily market fluctuations. This characteristic provides a smoother performance trajectory, making them a viable option for reducing portfolio volatility.
- Inflation hedge: The property values and rental incomes associated with private mREITs tend to rise over time, helping investors preserve purchasing power, especially during periods of inflation.
- Portfolio diversification: While many alternative investments focus on high-risk, high-reward opportunities, private mREITs offer steady income backed by real estate. They are a lower-risk complement to alternative assets, ideal for investors looking for predictable cash flow.
Challenges of private mREITs
Private mREIT returns are likely to remain sustainable in 2025. However, each investing strategy may have setbacks for individual investors’ goals.
- Interest rate sensitivity: Private mREITs can experience margin compression if borrowing costs increase. Fluctuating interest rates can also impact profitability, as they rely on short-term borrowing for long-term investments.
- Liquidity constraints: Unlike publicly traded REITs, private mREITs usually involve longer investment commitments, which limits their accessibility for investors seeking quick cash. They are better suited for those with a long-term investment approach.
- Market dependency: Performance is closely linked to real estate market conditions. Economic downturns, rising mortgage delinquencies, and declining property values can negatively impact mREIT earnings.
Investors should assess the quality of the loan portfolio and its resilience to market fluctuations.
A well-balanced approach that considers market conditions and investment goals can help investors maximize the potential of private mREITs within a diversified portfolio.
The Marquee Fund 1 difference
The team behind Marquee Capital Fund 1 mitigates risk by raising capital, sourcing loans, and managing all loan servicing, processing, and escrow in-house.
Rather than close and churn deals, we finance responsible investments through full-circle servicing.
Our Fund provides stability in market fluctuations with diversified holdings and mortgage products.
At an annual return rate of 8%, Marquee Capital Fund 1 often outperforms the stock market and treasury bills.
Alternative investment trends | 2025 wrap-up
Alternative investing trends in 2025 emphasize diversification, inflation protection, and technology.
Private mREITs offer high yields and stability but face challenges like interest rate sensitivity and limited liquidity.
Adapting to technology and sustainability trends will be essential as the market evolves.
Assess your risk tolerance and goals when considering any investment, including private mREITs with other options.
Ready to discover how private mREITs can be one of the smartest additions to your portfolio?
Start diversifying your investments with Marquee Funding Group today.