NAREIM Acquisitions and Asset Management Summer Meeting
Leave it to the National Association of Real Estate Investment Managers’ President, Gunnar Branson, to run events that get people thinking outside the box. At this week’s Acquisitions and Asset Management meeting, he brought in a keynote speaker who bills himself as an ‘Ethical Hacker.’ Nicholas Percoco of Trustwave Holdings spoke about some of the ways confidential information gets stolen. It was an eye opening and somewhat frightening discussion. I must share with you what I found to be the most outrageous piece of information.
Nick advised that we keep our mobile phones turned off (as in completely ‘powered off’) when in meetings. Apparently, malware (malicious software) can be downloaded into the phone - without your knowledge - and allow remote activation of the phone’s microphone. Someone looking to get confidential information can actually record the conversation without even being there!
When I heard Nick talk about this, I thought, “How crazy is that???” I was grateful to have heard this talk at the NAREIM Summer meeting.
Real Capital Analytics (RCA) US Capital Trends May 2013
Where are you investing your money these days? Going along with the trends or venturing out from the pack? Some of the discussions at the NAREIM meeting this week (see article above) centered around the on-going challenge of buying properties at the ‘right’ price and then executing an asset management plan to generate the level of current income that investors seek.
With the kind permission of RCA, please allow me to share some of their May 2013 highlights from the US Capital Trends report.
Sales of significant hotel properties in May totaled $1.1billion, down 12% versus last year. This is the first year-over-year decline in the hotel sector in 2013.
Hotel cap rates, averaging 8.0% nationally, remain well above the other property types and have stabilized in recent months.
Sales of significant apartment properties totaled $4.9 billion in May representing a 27% decline from a year ago.
Despite the slowing sales trend, cap rates trended lower in May, down approximately 10 basis points to a national average of 6.0%.
Sales of significant retail properties in May totaled $3.2 billion, down 15% year-over-year. The declines were similar across most retail subtypes as well as portfolios and individual property transactions.
Cap rates on retail acquisitions have been relatively stable with the national average for retail property still above 7.0%
Sales of significant industrial properties in May were the highest so far this year, totaling $3.8 billion, up 43% compared with 2012.
Average cap rates on industrial acquisitions have increased over recent months and may be influenced by both a greater proportion of distressed sales in April and May and the growing trend of increasing investments into secondary and tertiary markets.
Sales of significant office properties surged forward in May totaling $8.0 billion, up 68% measured against 2012. The gains were broad-based across both the CBD and suburban sectors.
Cap rates on suburban properties have exhibited inward movement in recent months while CBD yields have been relatively stable with the national average cap rate for all office properties still above 7.0%.
Only time will tell if what appears to be the ‘right’ price today will result in realizing the pro forma profit down the road.
Gmail ‘Undo’ Setting
Following last week’s column I received a thoughtful and enlightening email from a long-time OTR reader and thought I would share:
“Gmail does have an ‘undo’ setting – click on the settings icon in the upper right hand corner (the gear), then settings, and labs. I think all it does is delay the sending of your email a few minutes so you can stop it before it leaves Gmail. Once the email leaves Gmail server, there is no way to undo it.”
Pizza / Drink Thing - construction game
We played a very colorful game Monday night at the Summer Pizza / Drink Thing in New York City. Everyone seemed to have fun. Thank you all for your active participation!
Below are photos of the three construction projects with a brief description of each.
CONGRATULATIONS again to Table 1! Well done!
Table 1: Bad Bank Condos. A LEED (Leadership in Energy and Environmental Design) Platinum, fully accessible building with private entrances and a water feature.
Table 2: Bicycle repair shop with many "spare parts." They even got the bike inside the building!
Table 3: Rehabilitation/meditation center for overworked commercial real estate executives with an outdoor pool and natural cliff waterfall. Great use of the Lincoln Logs for benches!
We had fun watching everyone play Monday night, and in the planning process as well. While preparing for this game on my ‘patio’ across the street from where I live, there were lots of smiles from those walking by as people watched adults playing with their toys. It’s amazing how a little playtime can clear one’s head.
‘Shop for a Cause’ to Support Music Education
As many of you know, music has played a very important part in my life. Let me introduce you to the non-profit organization Education Through Music. ETM partners with New York’s inner-city schools to promote the use of music as a means of enhancing students’ academic performance and general development.
When you purchase a $5 Macy's saving pass from Education Through Music, 100% of the money received will support ETM's wonderful work! (Even if you don't use the pass - your $5 will still go to ETM).
Macy’s 8th annual ‘Shop for a Cause’ savings pass is good for use on Saturday, August 24, 2013 at any Macy's store (You’ll save 25% in many of their departments!).
Feel free to pass this along to family or friends who may be interested in supporting ETM’s work, or who just like to shop! Thanks.
To purchase a pass online, please visit.
A member of the OTR community pointed out the correct spelling of that fabulous toy store - FAO Schwarz. My apologies to toy store lovers everywhere!
You Touch Me
Something special occurs when I travel from conference to conference and meet OTR readers for the first time. I can’t tell you how fabulous it is to hear that something published in my column resonates with you.
What I have found so interesting over the years is that the majority of emails I receive back are about the ‘other stuff’ I write about - the similar experiences we have traveling down the road of life together. I continue to cherish this relationship that we share.
For the first time since the birth of this column in 1999 I’m taking some time off to recharge my batteries. Thank you for your continued encouragement and support.
Have a safe July 4th holiday and enjoy the month. See you back here in August!
Don’t forget the sunblock!
Conor Flynn promoted to Executive Vice President and Chief Operating Officer at Kimco Realty.
Zach Kayce, 2013 Graduate of the Johns Hopkins Masters of Science in Real Estate program, has joined Clarion Partners in Multi-family asset management.
On The Road
Sept. 15 – 17: NAREIM Executive Officer Fall Meeting, New York, NY
Oct. 23 – 24: PERE Summit, New York, NY
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