As I promised to the audience at the PERE Global Forum in Amsterdam last week here is the Summary of Key Findings & Trends from a Compensation Survey that was recently conducted in the real estate investment industry (U.S.). 46 companies participated:
1. After two years of declining compensation, pay levels for performance year 2010 were up, but still below pre-recession levels at most companies.
2. 88% of participants raised salaries in early 201, with most increases falling in the 3-5% range. Increases were most prevalent for mid-level and junior professionals.
3. 76% of participants paid out larger bonuses for performance year 2010 than they did for performance year 2009, with amounts at or above target levels in most cases (60% of respondents)
-Executive managers fared the best: median increase of 31% and average increase of 70%
-Less than 10% of firms reduced bonuses, whereas over 40% reported doing this in last year's survey
4. Year-over-year changes in long-term incentive awards varied considerably among participants
-Roughly half of participants (52%) increased long-term incentive awards for performance year 2010, with the remaining companies split between keeping long term incentive awards flat (24%) and reducing it (24%)
5. Looking ahead, most firms expect to increase pay for performance year 2011, but at relatively modest rates due to uncertainty regarding how the rest of the year will pan out from a performance perspective
-2012 salary increases are expected to be 3-4% (on average), although a meaningful number of firms (24% of participants) expect to keep salaries flat (only 11% took this approach in 2011)
-44% of participants expect to pay out larger bonuses, most of whom expect 1-20% increases over performance year 2010 levels, while 41% of participants expect to keep bonuses flat (18% reported this in 2010)
-long-term incentive awards continue to vary by company, and eligibility parameters may broaden at some firms.
This week I was a guest at the NAREIM (National Association of Real Estate Investment Managers) Executive Officers Mid-Year Meeting. It was the first NAREIM meeting with Gunnar Branson as President of the organization. The attendees are typically very senior executives from investment management firms who get together and share openly. It's a comfortable group and I had the opportunity of meeting a number of senior industry folks that I hadn't known before. If you're an investment manager, it's a good organization to check out. In addition to the business benefits, there was a mentalist entertaining us at the closing dinner. I had seen him perform once before at a CBRE event. The stuff he does just makes you shake your head in amazement and smile with the joy of someone doing something you can't (and don't care) to figure out. He also has a great dry sense of humor (and you appreciate it more if you have one too!). He's memorable.
Here are some of my takeaways from the NAREIM event:
1. Industry consolidation and capitalization trends
a. Real estate M&A activity: Who are the buyers? Wealth management firms (smaller transactions); Money management firms; Financial firms; Insurance companies & Bank/Trust companies.
b. Insurance companies are showing more interest in acquiring real estate companies
c. Advice when looking at a company to acquire: Go for growth and opportunity; get out in front of the growth opportunity
d. "Once you're labelled an "Emerging Manager" you may never be able to get away from that label."
e. Deal environment panel comments:
(1) "People are adjusting their thinking re: price discovery which makes more transactions possible."
(2) "As time has progressed its gotten tougher and tougher to underwrite deals to make sense."
(3) "We're proceeding with caution; but we're proceeding." Large institutional real estate owner
(4) "Investors are dialing back assumptions and elongating absorption."
(5) "For the first time we're seeing Sovereign Wealth Funds investing "off the coast."
(6) "I see 2012 as a very difficult year."
A friend and very talented artist, Shannon Corey, has announced the following shows. Unfortunately I won't be able to attend either but if you're in NY or Philly and like singer-songwriters (she's a piano player) you should check her out:
1. Mon, Oct. 3rd - NYC - Birthday Show - The Bitter End-free download and cupcakes - Amazing
2. Wed, Oct. 5th - Philly - UPenn - to get in you have to be on the 'list.' Write directly to Shannon and she'll get you on the list (email@example.com).
I got an email from a friend in Europe who got this from a friend which I pass along to you even though I have no stomach for political rhetoric but I know that a lot of folks will find these comments interesting: "Last night I attended a dinner hosted by Nigel Bolton (head of European equities at Blackrock) who on the previous night had dinner with Frau Merkel with a small number of European investors. Merkel believes the IMF is trying to force EU into leveraging the EFSF fund but this is basically a US scheme. Q. What is the EFSF? A. As part of the overall rescue package of €750 billion, EFSF is able to issue bonds guaranteed by EAMS (Euro Area Member States) for up to € 440 billion for on-lending to EAMS in difficulty, subject to conditions negotiated with the European Commission in liaison with the European Central Bank and International Monetary Fund and to be approved by the Eurogroup. Merkel says this is a non runner... It would be Unconstitutional in Germany. She is totally is against this. Her view is this crisis will take time and there is no short, easy solution. She was very negative on the US and their response. Her tone was a shock to those investors listening. She was more positive on the long term benfits of the EUR as long as the peripherial countries focused on balanced budgets.... Spain & Ireland OK. Greece - "we can only get the PM to do things if we half drown him... He didn't want want help last year but we have to force him into this life support system."
Reuters Real Estate has revamped its site and is in their Beta test period. They have made some excellent updates and there's a lot of good information and other stuff there.
Remember: There are only a few seats left for The Nick Tyrell Memorial Seminar on October 12 in London. You can register and contribute here. It'll be an educational and beautiful day honoring the memory of an industry influencer and beautiful guy.
A find in Amsterdam. So I had a little break during the PERE Forum in Amsterdam and was walking down the street and walked by a very interesting window display. I couldn't figure it out right away but it looked like a place where I could buy something for my wife. I went in and realized that it was a massage place called 'doctorfeelgood.' I hadn't had a massage in ages and after studying the menu board, made an appointment for the next morning. After the massage, which was long overdue (I hadn't realized how much stress had built up), I was sitting, zone-ed out in a peaceful place and sipping water, when in front of me I noticed hanging on the wall, two large framed montages and went to take a closer look. There were a lot of backstage passes to rock concerts and a lot of hand-written notes of thanks from some very well-known rockers. They were all addressed to the owner of the salon who I learned had been a go-to massage person for rock musicians on tour for a number of years. It's a great place.
doctorfeelgood, Scheldestraat 16, Amsterdam. I may actually start getting monthly massages but it's really a luxury for me right now. Anyway, enjoy!
On the road....
Sept. 30-Oct.3: Asheville, NC to visit my grandsons Sean (2+) and Gavin born Aug. 25.
Oct. 3-6: Las Vegas to attend and be on a panel at the CBRE Summit.
Oct. 10-15: Northern California
Oct. 17-19: Chicago for the PREA Fall Conference
Oct. 20-21: New York including seeing my new grandchildren, Edie and Benjamin (yup, lots of kids!)
Oct. 24-28: On the road...destinations TBD
Nov. 1-3: Washington, DC to attend the CRE Annual Convention
Nov. 4-11: New York including moderating a panel including at the PERE Forum
6:55am California Time-Posted in-flight. Amazing!
These are my views and not that of my employer.