NAREIM, Stickball & Willie, Mickey & The Duke

This week I attended my first, but hopefully not my last, NAREIM Senior Executive Meeting. It’s a nice sized group and the interaction and openness of attendees was refreshing. Here, in no particular order, are some things I took away which I hope you will find interesting as well:

I. General comments

a. "Bid/Ask spread is reversed: bid is often greater than seller expects."

b. "Debt/Equity people are taking interest rate risk that they aren’t acknowledging."

c. "Everyone is either in the club format or wants to be in the club format or thinks they want to be in the club format."

d. "The capital markets are ahead of real estate fundamentals."

II. Lessons Learned

a. Fund structure and investor rights issues

b. Replacement of GP

c. Control issues

d. Don’t be greedy

e. Leverage: good in good times; the devil in bad times

f. LP’s having to underwrite fellow LP’s in addition to the GP

g. Dealing with one LP in a fund trying to squeeze an extra pound of flesh out of a manager.

h. Importance of communication both between the LP and the GP and the LP within their own entity

i. Key man provisions

j. Extension of investment period (“GP says ‘look how prudent I was to not invest; I deserve an extension.”)

k. " The U.S. is still the best place to invest over the next five years."

l. Concern about ‘core herd mentality’ today

m. "Hard for us to find places to park long-term real estate equity capital."

i. “The way to get returns is to return something. You get in, you take the risk and you get the hell out.”

i. More capital to be deployed into debt going forward

n. “I’m torn on the club deal concept. Investors are only like-minded for a short period.”

o. “Club transactions make managers into brokers."

p. “This is a people business. It’s relationship driven. I like to invest with managers with whom there has been a ‘sustained confidence’ and who have exhibited the ability to work through challenges”

q. “I want to do as much business with the fewest number of managers possible.”

r. “A lot of good will can be generated by being candid.”

III. Notes from roundtable discussion on ‘Business Management Issues’ (we spent the whole time pretty much talking about compensation issues). There is hiring going on. Analysts, portfolio managers, asset managers, acquisition people. This is a very good sign for the industry. I think many of you can relate to some or all of these comments from around the table:

a. “We’re finding too many people who present themselves as asset management people don’t have real real estate experience

b. “Asset managers have to know how income producing real estate generates revenue.”

c. “Comp is going up; real estate is back in vogue.”

d. “The human component of our business is the most challenging; the real estate doesn’t talk back.”

e. “Succession planning is a big challenge for us.”

f. “The challenge: to be able to identify the right person in terms of experience/chemistry BEFORE you hire them”.

g. “In some cases, people represent themselves to us as a 747 pilot when in reality they’re really a bus driver.”

h. “We’ve learned that our people don’t like being asked to spend time on something that isn’t going to work.”


Duke Snider died this week. He was the center fielder for the Brooklyn, then Los Angeles Dodgers. When I was growing up there were three great centerfielders in New York: Snider, Willie Mays of the New York Giants and Mickey Mantle of the New York Yankees. I was a Mantle fan. Actually, he was my (and millions of other kids) idol. Reading Duke’s obit got me thinking back to those days. When we played stickball and we knew all the players in the major leagues. We’d each pick a team to be and then emulated the batting and pitching characteristics of each player. We’d debate who the best centerfielder was. It was also a much simpler time. It was a great time to grow up. It was safe. All we did was play sports from morning ‘til night; whatever the season, that was the sport we played: baseball, basketball, football, and stickball. And some ‘city sports’ like boxball, stoopball, handball, Chinese handball (why it was called that I’ve never known), ball hockey, punchball and others that I can’t recall at this moment. Of the three, Willie Mays is the last one standing. As I look back on their careers, I will admit, here, for the first time, that I believe Willie was the greatest all around centerfielder of that time and perhaps of all history (I'm sorry I put the hurt on your Willie Mays doll Sande).

Anecdote of the week: Heard from a keynote speaker. “I'm always looking to improve my public speaking skills. I was reading the speaker feedback surveys from a conference. One respondent wrote a comment. "If I had one hour to live, I'd want to spend it listening to your presentation." Very touching. Then I read on: “Because sitting through your presentation is like an eternity!”

On the road....



Mar. 7-15: New York

Mar. 16-17: Washington, DC for the PREA Spring Conference

Mar. 21-25: Northern California

Mar. 30: New York to attend IMN's inaugural Real Estate Investment & Search Consultants Congress and moderate a panel called “REAL ESTATE ASSET ALLOCATION: WHAT IS YOUR CURRENT VIEW? IS IT TIME TO INCREASE OR DECREASE ALLOCATION? Esteemed panelists: Catherine Polleys, Principal, HEWITT ENNISKNUPP, INC.; Sean P. Ruhmann, Senior Consultant, Private Markets, NEPC, LLC; Justin C. Mallis, Senior Research Analyst, SEGAL ADVISORS, INC; Martha S. Peyton, Managing Director - Global Real Estate, TIAA - CREF

Apr. 13-15: Venice, Italy to attend the INREV Annual General Meeting

May 12-14: North Palm Beach, FL for the annual meeting of the Homer Hoyt Fellows.

June 9-10: London to moderate a panel at the PERE Forum-Europe.




These are my views and not that of my employer.