Friday, September 17, 2010

Getting back on the road

INREV conducted structured interviews with twenty-two people recently.  This group included 13 fund managers and nine investors (of which three were fund of funds).  I found the results to be pretty poignant (something be pretty poignant or just poignant?).  Here are some of my takeaways:

1.  Both fund managers and investors agree that a failure to exercise a fiduciary duty to investors has led to a breakdown of trust between actors in the private real estate vehicle industry (at this point this relates to a minority of fund managers).

2.  Those interviewed commented on the lack of communication and transparency that pervaded as the debt crisis worsened and real estate values declined.

3.  For funds lacking a regular and established reporting procedure, investors had to force information flow.  However, investors did indicate that smaller platforms provided greater transparency of information).

4.  Investors are keen to establish more effective an participatory advisory boards.

5.  Investors want to use the shift in the balance of power to ensure the efficient removal of a non-performing manager (No-Fault Divorce provision).

Other headline topics:   

  • Alignment of Interest:  Basis of Fees, Co-Investment, Retaining the Team, Compensation and Bonus Structure, Investment Committees
  • Deployment of Capital
  • Investor to Investor Relationships
  • Investment Horizons and Liquidity
  • Scale, Capability and Sophistication
  • Leverage and Debt Strategy
  • Cross Collateralization
  • Refocus on Risk and Return
Can there be any question that (a) the balance of power has shifted and (b) it's no longer your fathers'
real estate investment management business? is celebrating it's 10th anniversary.  I remember when Jonathan Schein, Mike Desiato, John Salustri and their team first launched  They have had a significant impact on the way we get our news (and opinions).  It takes a village to operate Globest. com.  Congratulations you guys!

Congratulations to friends:
  • Dr. Russell Chaplin who joined Aberdeen Asset Management.
  • Dr. Peter Hobbs who joined IPD.
  • John Klopp who was named Co-CEO/CIO at Morgan Stanley Real Estate.
  • Tuba Malinowski who joined Stockbridge.
  • Martina Malone who joined AMB in Europe
  • Presidio Partners on their merger with Macquarie.
  • Steve Walker who has joined TRECAP Partners

This is the place where I got a ticket this week.  The first one in almost 15 years.  But it won't hold up.  The ticket was for failing to stop for a pedestrian in a crosswalk (California law...which in itself causes potential accidents).  Anyway, although this view is sideways, there is no way that anyone driving (right to left as it were) can see whether someone is on the sidewalk or has stepped off into the crosswalk (due to the way the road and the sidewalk are constructed).  Some cop was sitting there, holding up a line of 12 cars with nothing better to do and was hoping that someone (me) would come by.  He made an amazing statement when I asked him why he had to write me a ticket (instead of giving me a warning):  "If I don't give you a ticket, I'm not doing my job!"  After I win this case, I may approach the Chief of Police in this one-horse-town and ask him about that statement.  Given that they've also installed a bunch of cameras at intersections to catch people doing something wrong so they can electronically issue tickets for as much as $475, this attitude doesn't surprise me.  I believe, everywhere in America, it's all about increasing cash flow these days. 

On the road....

Sept. 20-21:  New York
Sept. 27-29:  Tysons Corner, VA (NMS Fall Conference)
Sept. 30:  Where Sean Felix hangs out
Oct. 1:  A Great Place on a Great Lake.
Oct. 4-7:  The City By The Bay (PREA Conference)
Oct. 12-15:  City of Magnificant Distances (ULI Fall Conference)

Oct. 18-21:  Gotham
Oct. 26-27:   The City So Nice, They Named It Twice (PERE New York Forum) 
Nov. 5:  The City of the Big Shoulders
Dec. 8:  Mainhattan (no typo)  (INREV Committee Meetings)

     These are my views and not that of my employer.

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