Today was the UNC/Kenan-Flagler Real Estate Challenge day. I was one of the judges. The case was a monster involving the redevelopment/development of The General Artigas Train Station Site in Montevideo, Uruguay. 15 teams from Real Estate MBA programs around the country (this year there was a team from the London School of Economics) participated. The teams have 57 hours to study the case, do the research and prepare a presentation. It's not very long but the results are very impressive. This case did not have a clear-cut answer so there was a lot of room for creativity. All the schools teams are to be complimented. But, as in all competitions, there is a winner. This year it was the group from Haas School at Berkeley. Second place went to the team from the Fuqua School at Duke and the tie for third place went to Marshall USC and Darden UVA. Congratulations to everyone.
I’ve been coming to this event for a number of years now. It’s a great opportunity for me to meet another generation of people who are passionate about the real estate industry. As it’s the only industry I’ve ever worked in (unless you count rock and roll), I love getting to know these students, most of whom have had jobs and decided to go back to get their MBA in real estate. Dave Hartzell, who runs the program is the magnet for attracting students. His enthusiasm is contagious and, once exposed to him, I don’t think there are too many students who can turn down an invitation to be part of his program. Dave’s partner in crime in this whole thing is Susan “The Hurricane” Drake, Associate Director of the Center for Real Estate Development. Susan and I have gotten to know each other over the years and she is one special woman and part of the reason the program has been so successful. If you are interested in the UNC Real Estate program and being invited to the next UNC Real Estate Conference (held the day before the challenge) please send an email to cred@unc.edu.
I’ve been coming to this event for a number of years now. It’s a great opportunity for me to meet another generation of people who are passionate about the real estate industry. As it’s the only industry I’ve ever worked in (unless you count rock and roll), I love getting to know these students, most of whom have had jobs and decided to go back to get their MBA in real estate. Dave Hartzell, who runs the program is the magnet for attracting students. His enthusiasm is contagious and, once exposed to him, I don’t think there are too many students who can turn down an invitation to be part of his program. Dave’s partner in crime in this whole thing is Susan “The Hurricane” Drake, Associate Director of the Center for Real Estate Development. Susan and I have gotten to know each other over the years and she is one special woman and part of the reason the program has been so successful. If you are interested in the UNC Real Estate program and being invited to the next UNC Real Estate Conference (held the day before the challenge) please send an email to cred@unc.edu.
Jacques Gordon, Global Head of Research & Strategy at LaSalle Investment Management, was one of the presenters yesterday. Until Jacques started busting Hartzell’s chops I didn’t realize that the two of them worked together many years ago and have been good friends ever since. Jacques engaging presentation included some interesting facts and comments:
· Global institutional real estate is a $6 trillion industry
· Percentage of the $6 trillion is attributed to: Americas (36.2%), Europe (34.6%), Asia/Pacific (24.8%), Middle East/North Africa (3.5%)
· Early 2011 Outlook:
o Global economic outlook much improved in last 60 days
o U.S. picking up steam despite long-term concerns about fiscal health
o Deal flow picked up globally in 2H2010; growth will continue in 2011
o Buyer focus on top tier, leased assets, will broaden in 2011
o RCA 4Q2010 transaction volumes were strongest since 2007
· “Capital shouldn’t be thinking about what did happen but rather what should happen and how to price itself"
· 9 out of 10 new mandates he’s seeing, from all types of investors are global
· 13 of the largest 25 real estate companies by market cap are in Asia
· R.E. Transparency Index (most transparent countries 2010):
o Australia
o Canada
o UK
o New Zealand
o Sweden
Some other notes and quotes from the conference from Bob White RCA; Ed Fritsch, Highwood Properties; Wes Fuller, Greystar; Mike Mcdonald, Eastdil Secured; Paul Whyte, Credit Suisse and Chip Rogers, The Real Estate Roundtable:
· The bottom line: for the real estate industry to improve we need jobs
· Biggest apartment rent growth in 2010
o Portland, OR
o San Francisco
o San Antonio
· There are 22 multi-family funds raising capital today vs. 5 in 2009
· There’s a bifurcation in the market. Deals are either trophy or trash
· It’s estimated we’re 35% along working through the distress
· 2010 most active markets for property sales
o NYC Metro
o LA Metro
o DC Metro
o SF Metro
o Chicago
· The Stages of the Real Estate Downcycle:
1. Denial
2. Anger
3. Depression
4. Acceptance
5. Transactions
· Capital will get frustrated at the core and opportunity ends and gravitate to core-plus/value-add.
· The best way to underwrite a deal is to look at the price per pound vs. the replacement cost
· “The reason auctions are popular is that people get excited and start chasing the bid instead of the product.”
I found this interesting and want to share it with you. It’s from an interview with Robin Domeniconi, SVP and Chief Brand Officer for the Elle Group.
You can say anything to anyone, as long as you say it the right way. Maybe you need to preface it with: “I’m just curious, and I want to understand what you’re saying better. Right now, my point of view is quite different. So can you help me understand why you don’t want to do this or why you wanted to do this?”
If you get people talking and challenging each other, you’re going to have the ability to arrive at the right decision so much quicker and so much easier. I just make it so it’s a human environment. I’m not going to motivate by fear, but I am going to motivate by saying, “Let’s win. This is going to be so much fun to figure out. Let’s figure it out together.” I guess my management style is very much about like imagining we’re all children and very vulnerable. Because we are.
We’re all vulnerable and we all are really human. We have all this stuff in side of us that we’ve carried with us. So if you have compassion for that, and you understand that, and you know someone’s smart, then you need to make an effort to understand why they may behave the way they behave. I think everyone should open their closet and show the skeletons.
In October, I wrote to you about my old friend Charlie Oliver’s grandson Logan. Logan has a chromosomal defect known as hypo diploid, which means he has less than the number of chromosomes with full genetic composition that normal humans should have. This complicates his leukemia and worsens his prognosis. Logan’s case is rare. I got the news this week that Logan received his transplant and is "reborn." He's doing well. Logan’s family asked me to extend another big ‘thank you’ to those who generously donated to help them through this difficult (and costly) experience and for those who prayed for Logan.
Congratulations to:
Bob Bartlett who joined Sentinel Real Estate in New York as Managing Director of the Marketing and Client Services Group (better buy some warm clothes Bob!).
Howard West, formerly of Meketa Investment Group who joined The Wilder Companies in Boston.
IT Consulting Firm of the week: Wagner Weber (http://www.wagweb.com). They have been the IT consultants for my company for a number of years. Recently we moved offices and they got us up and running literally overnight. More than that, they are professionals and nice people. The have been providing IT consulting services to the financial services community since 1985.
On the road....
Feb. 12-15: West coast Feb. 16-17: Des Moines, Iowa
Feb. 18-22: New York
Feb. 23-26: West coast
Feb. 27-Mar.1: Santa Monica, CA to attend NAREIM's Senior Executive Officer's Meeting (National Association of Real Estate Investment Managers).
Mar. 16-17: Washington, DC for the PREA Spring Conference
Mar. 30: New York to attend IMN's inaugural Real Estate Investment & Search Consultants Congress
Apr. 13-15: Venice 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.
Photo: Daytona Beach, FL. Exit from restaurant parking lot. Obviously intended for children riding in the car with their parents! Although, from what I see, most kids in cars have headphones on, are into their own thing and are very quiet (not necessarily a good trend in my opinion).
These are my views and not that of my employer.
