Friday, November 19, 2010

I read somewhere that it's important to be happy with what we have and not disappointed with what we don't have. We as a people have been going through some very difficult times over the past two plus years and from everything I hear and read they're not over yet. We got spoiled and felt entitled to things getting better every year (I learned my own lessons on this subject in the late 1980's but that's a story for another day). So, at this family time of year, let's appreciate what we have, the little things which are really the important things and stay away from those thoughts that take us into places we don't really want to go. I wish all of you a happy and healthy Thanks giving.

The venerable commercial real estate industry publication, Real Estate Forum, recently conducted a survey of it’s readers regarding the investment real estate climate.  I thought you would find a few of the results interesting:
  • “Trophies and trauma are still what is trading.”
  • “There’s still a huge disconnect on cap rates between buyers and sellers, though reality is sinking in on the sellers side....very slowly.”
  • What will offer the best returns over the next 12 months?
    • Distress (27.3%)
    • Value-add (24.4%)
    • Opportunistic (21.9)
    • Core (11.6%)
    • Core-plus (7.0%)
    • Offshore Investments (5.0%)
  • The issue that will have the greatest impact on the investment climate over the next 12 months will be:
    • Stalling recovery (40.6%)
    • Gov’t action/Tax Reform (24.3%)
    • Commercial loan defaults (19.7%)

My guess that the majority of the respondents of this survey are developers, brokers, lenders, corporate real estate executives and others who are on the front lines of the deal world so, while their guess is as good as mine about the future, their livelihood is most directly affected by all the factors relating to commercial real estate investment.  It’s hard to believe that we’re coming to the end of 2010, a year when things were supposed to get better.  And, it was better than 2009 but there a book by musician Richard Farina called “Been Down So Long, It Looks Like Up To Me” that may be the most accurate way to describe the differences between 2009 and 2010.  

PERE (Private Equity Real Estate Magazine) is holding their PERE Forum-Europe in Frankfurt on December 6 and 7.  They’ve invited me to moderate a panel of industry heavyweights (Stefan Brendgen, CEO, Allianz Real Estate Germany; Laurent Luccioni, CEO, Europe, MGPA; Will Rowson, CIO, ING Real Estate-Europe; Ralph Winter, Founder, Corestate Capital and Michael Morgenroth, Management Board Member, Gothaer Asset Management (and also Chairman of INREV).  The topic:  Exploring Investment Opportunities in Key European Markets:  London, Frankfurt, Paris, Madrid and Stockholm.  PERE just told me that any U.S. Pension Fund, Endowment, Foundation who would like to send a delegate can attend for free.  If you qualify, and are interested, please let me know and I’ll hook you up.  I love moderating panels and have gotten good feedback on my style which engages the audience immediately and never forgets that the panel has an obligation to the audience to give them some real take-aways.  Too often, moderators pander to their panelists with the result being watered down, redundant commentary.  Moderators need to challenge their panelists and the audience to bring out the best that they have to offer.  Conference attendees deserve nothing less.  

A recent survey of almost two hundred U.K. institutional real estate investors revealed these results:  
  • Half of those surveyed indicated that their investment strategy will be a mixture of listed and unlisted real estate.
  • With the Asian population becoming wealthier and aspirational attitudes beginning to change, there has been a rise in the number of Asian consumers and a liberalisation of consumer credit. As Asian consumers put their savings to work, there should be very tangible benefits to real estate investments.
  • The investible universe for real estate in Asia is low relative to other regions, with JP Morgan suggesting it could grow at almost twice the pace of Europe and North America between 2009 and 2028. This presents a significant opportunity to participate in the development and funding of institutional grade real estate, and to access a growing universe of investment properties.

On the road...
Dec. 6 & 7: Frankfurt am Main where I'll be moderating a panel at the PERE Forum-Europe
Dec. 8: Mainhattan to attend the INREV investor platform and committee meetings (I'm on their membership committee)
Dec. 14-21:  The Big Apple
Dec. 20:  New York:  The Second Not-Really-Annual Institutional Real Estate World Buy Your Own Drink Holiday Get Together.  6:30pm at Pera Brasserie, Madison bet. 41 and 42.
Jan. 12-14: Laguna Beach, CA to attend the IMN Opportunity Fund Conference
Feb. 1-3: Dana Point, CA to attend IREI's VIP Conference

Manney Felix:  May 1, 1917-November 18, 2009.  He loved that hat!

These are my views and not that of my employer.

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