One of the most uplifting things I think I've ever seen was watching the live feed of the rescue of the 33 Chilean miners this week. The funny thing was that the mechanism used to bring them up looked like it was designed after a fishing reel and seeing the hand-written marks on the side, tracking the progress of the capsule, made my heart race. I think a lot of us felt the same way.
IPE Real Estate published an article which asked a few Europen pension funds about manager behavior during the dark days (I sure hope they're over). Here are some of the highlights:
1. Transparency and communication was adequate
2. Questions remain unanswered about continuing to buy assets ahead of the crisis.
3. Communication and transparency varied significantly
4. Managers that were slower to address problems had fewer solutions
5. Proactive managers have earned trust and are likely to benefit from future investments
6. Only managers that have been transparent and earned trust will raise future capital
7. Investors can differentiate between market-wide problems and fund-level problems
8. Would have liked quicker information about falling valuations
9. Prefer managers that are not too eager to invest capital
10. Fund of fund managers have a dual communication role to play
These are not at all surprising although one pension fund admitted that it's easy to criticize in hindsight. But it seems to me that there are simply some basis 'rules of the road' when it comes to the fiduciary role that an institutional real estate investment manager should follow, regardless. I believe these are:
A. No surprises (If there's good news and bad news, give the bad news first).
B. Report news early and accurately
C. Be proactive. Don't wait for your client to ask questions. Anticipate them and offer answers first.
Robert Tischman, the founder of what became Tishman Speyer Properties died this week. In his obituary I found this on his philosophy on deal making: “Always leave something on the table for the other guy.” Some of the people I've worked had this same philosopy, others, one in particular, always wanted more. "Go back to that landlord and try to get him down from $2.92/sq.ft to $2.84." (this was big space, many years ago). Then, when you got that, he wanted to squeeze more. Believe it or not I had to seach high and low on the web to find some reference to this but finally found it in the book, Negotiating for Dummies. "It's about closing the deal in a way that makes both sides feel good about the outcome. Both sides should feel as though they achieved something that is workaable and that everyone involved in carrying out the deal will want to make it work." All of us know that there are lots of kinds of deals: leasing a space, buying a building, negotiating fees, negotiating employment agreements or selling a product or service. If and when you run up against someone who says, "This is the deal, there's no negotiating it", how does that make you feel? Some will get up from the table, head for the door and sort of expect the other party to say, "Now, wait a minute." Sometimes they do and sometimes they don't. But if you know, in your heart, that you're ready to walk away from the deal, it's a powerful negotiating tool. Others won't say a word but will never do business with you again. So, my hat is off to you Mr. Tischman. Maybe your philosophy is one for the ages, but hopefully not.
Books of the week:
Emerging Market Real Estate Investment: Investing in China, India and Brazil. This recently released book was written by my good friend, David Lynn and his colleague, Tim Wang of ING Clarion. It's gotten some excellent reviews and endorsements such as this one: "A compelling argument for investing in real estate opportunities in China, India and Brazil. This is the most comprehensive discussion of topics and investment strategies that real estate investors must consider when evaluating emerging markets.” With more and more interest in these markets it seems like a 'must read' for every real estate investment professional. Congratulations you guys.
Radically Simple written by Rozanne Gold, the wife of a good friend, Michael Whiteman (one of the world's most influential restaurant consultant) which redefines the idea of simplicity in the kitchen.
On the road....
Oct. 18-21: Gotham
Oct. 22: The First State (aka 'The Chemical Capital of the World)
Oct. 26-27: The City So Nice, They Named It Twice (PERE New York Forum)
Nov. 5: The City of the Big Shoulders
Dec. 6 & 7: Frankfurt am Main where I'll be moderating a panel at the PERE Forum-Europe
Dec. 8: Mainhattan to attend the INREV investor platform and committee meetings (I'm on their membership committee)
Photo: Two random dudes spotted indulging themselves on what may be the best milkshake ever created at the Burger Bar in Macy's, Union Square, San Francisco.
These are my views and not that of my employer.
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