Friday, April 27, 2012

PERE Global Investor Forum / RCA U.S. Capital Trends / People Stuff

I was truly on the road this week as I chose to drive from my home to Los Angeles where the PERE Global Investors Forum was being held (about 7 hours).  I've always loved driving long distances and don't get a chance to do it much anymore.  It gave me time to be by myself and think and I came up with a few good ideas and also remembered some things that I had been meaning to do but had forgotten.  The PERE Forum was, in the opinion of many, one of the best events they've been to and I don't think they were just saying that to me because I played a couple of roles during the event!  Zoe Hughes of PERE, currently on maternity leave, put the program together and it lived up to the advance billing.  

Ted Leary interviewed Mike DiRe of CalSTRS and Ted Eliapolous of CalPERS who were genuine in describing their challenges and their successes.  Robin Marriott interviewed Steve LeBlanc of Texas Teacher Employees Retirement System who announced that Eric Lang will be taking over as head of real estate in June when Steve leaves.  Terri Herubin of The Townsend Group gave an excellent presentation and then answered some very direct questions very directly.  There were about 220 attendees and many people told me they thought that it was that size that gave them the chance to really get a chance to have substantive conversations.   Here are a few takeaways from some of the LP's:

-"We've shifted our investment to more income opportunities." 
-"More focus on doing business with women and minority owned investment advisors."  
-"We're working on keeping down the number of managers we invest with."  
-"We had good success with the idea of "develop to core" and think it can still work with good local operating partners."  
-"If one of our 'partners' plans to do something outside of the box they need to give us a heads' up."  
-"We've learned from the mistakes we've made in investing but if we sit on the sidelines we won't learn anything."  

The panel I moderated was on investing in distress and had five very experienced people.  Some of their thoughts:
-"Safety is expensive.  Risk is cheap."
-"We steer away from the herd and avoid bidding wars."
"We like 'out of favor' markets and will take bankruptcy and construction risk where there is less competition for the deals."
-"It's important to match up distressed investing with your management capabilities."
-"We want to sell to someone who is overpaying for safety."

One of the great things about the event was the number of younger (than me) people in attendance.  Many of them are in marketing/capital raising/client services/investor relations there was a lot of lively conversation.  One suggestion I make in my "How to get more out of attending a conference" training sessions is this:  If you're attending an event with a colleague, don't hang around or sit with them; divide and conquer; that way you're getting to interact with twice as many people (Note:  An exception to this rule is if your colleague is new to their job or has not been to too many other events.  Then, taking them around with you and making introductions is acceptable!).  Another suggestion is that when you've decided to take the time and spend the money to attend an event you should "be there"; be present.  Sitting in a panel discussion and working your emails is not only rude it doesn't make sense.  If you're bored or just have so many urgent things going on, leave the session and do your work.  

This reminds me of something I wrote about a long time ago.  I had fought getting a BlackBerry.  No one had ever accused me of being 'slow to respond' or 'out of contact' and, with all the travel I was doing on most days it was limited to when I was on my computer early morning and early evening.  So everything was cool.  But I was at an event and walking in the 'trade show' part and come upon a booth there was this guy on his Blackberry.  I asked him, "So, how do you like that thing?"  "Don't know how I ever lived without it," he said.  "You know, I just don't have that many urgent things going on every day to feel I need one," says me.  I'll never forget his tongue-in-cheek response, "You know, until I got this I didn't realize how many urgent things I have going on each day!"  Hey, I know that many of us are expected to be 'on' 24/7 and to respond immediately to each and every text/email/call we get.  And believe me, I appreciate it.  But remember that sometimes, when we respond or react too fast to something we make mistakes; we write something we wish we could retract but it's too late.  Anyway, enough preaching for this morning.  If you'd be interested in having me come in an conduct a class for your team on "How to get the most out of attending an industry event" or "How to network" or some of the other eclectic skills I've helped people develop just let me know.

INREV Annual Meeting:  Due to a conflict I wasn't able to attend their meeting this week in Vienna (Austria vs. Virginia) but spoke with a couple of friend who were there and the one word theme they agreed on was "Caution."  As I travel around and talk with the sources of capital (pension funds, endowments, foundations, family offices, sovereign wealth funds and plain ol' rich people) I am hearing two different stories:  caution on the one hand and assertiveness on the other.  Not everyone has the same tolerance for risk, nor should they.  So while not 'throwing caution to the wind' those folks with an appetite for opportunity and fire in their bellies are certainly out there in force.

Some headlines from RCA's 1Q12 U.S. Capital Trends Review published this week:

• Sales of commercial properties totaled $50.3b in Q1’12, up 40% from a year earlier. Positive momen­tum has returned from the slowing experienced in the second half of 2011 when CMBS conduits and other lenders reigned in their origination activity.
• Sales of retail properties surged ahead 89% from a year earlier on strong portfolio volume. Hotels were the sole exception to the positive volume trends and transaction activity has been declining over the past two quarters.
• Cap rates continued to trend lower for CBD office, apartment and retail properties and were rela­tively flat for suburban office, industrial and hotel properties.
• Although the pricing disparity between the Major Metros and the rest of the US narrowed somewhat during 2011, it appears that trend has reversed, at least temporarily, in the office and apartment sectors.
• This pricing premium differs significantly across, and even within, each of the six Major Metros. A trend noted across several property types is that the Chicago and LA metros have not rebounded as strongly as the other four. In addition, the pricing disparity in a number of markets within each Major Metro is very wide compared to historic averages.

Congratulations to Andrew Dietz who just joined ASB Real Estate Investments as Head of Marketing and Client Services, Leah Dillion who (not too long ago) joined ProLogis as Vice President/Global Client Relations, Patrick Kanters of APG who was named chairman of INREV and Jon Dishell who recently joined American Real Estate Partners as Managing Director of Fund Management and Investor Relations. 

Yes, I do lead a sheltered life.  I didn't know until just the other day that there is a professional basketball player in the U.S. whose name is Metta World Peace! (And I only know about it because of the headlines about him being 'barred' for seven games:  He hit an opposing player in the back of his head with an elbow causing a concussion). So much for peace!. 

Happy Birthday Kev!

New:  "You looking for me?"  OTR Job Aid
If your company is looking to fill a position and you are doing it yourselves (i.e. have not engaged a recruiter) I'll be happy to post a very brief job description and an email link.  Please send it to me by replying to this email.  (Also if you've got opportunities for summer interns.)Thanks.  

On the road....
May 3:  San Francisco for client meetings and other stuff.
May 14:  Please join me at the West coast celebration of the launch of my new management consulting firm, Solutions by Steve Felix at Blanc et Rouge Wine Bar, Two Embarcadero Center/First Floor.  I'll be there starting at 5:30pm and will stay with the last one standing!  Dutch Treat.  I hope you can join me and feel free to invite your industry friends.  
May 16-19:  North Palm Beach, FL to attend the annual meeting of The Hoyt Fellows
May 28-June 8:  New York for client meetings and to attend IMN's U.S. Real Estate Opportunity & Private Funds Investing Forum where I'll be moderating an interesting session on GP Mergers.
Sept. 11-12:  Paris to attend the GRI Europe Summit 2012

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