Friday, February 8, 2013

RCA Europe Capital Trends 2012 / So Long New York City Mayor Ed Koch / Patience Required

RCA's Europe Capital Trends:  2012 Year in Review

A few takeaways from this report published on February 5, 2013 by RCA (Real Capital Analytics):
  •  European transaction volumes and yields were largely flat in 2012 compared with 2011
  • Cross-border investors increased their activity while domestic investors decreased activity
  • Opportunistic buyers are beginning to feast on assets being unloaded by European banks
  • ‘Office’ accounted for 42% of all transaction volume in 2012
  • Investment capital from the Middle East and Asia (excluding-Japan) gathered further momentum
  • The top five investment markets, unchanged in the last three years, are London, Paris, Berlin, Stockholm and Moscow in that order

I've always been intrigued by which cities are the 'hottest' for real estate investing.  Many of us remember the Japanese investors making their move in the U.S. (particularly in New York) during the 1980's, buying trophy assets for what amounted to zero current return while looking 50 years down the road to make money.   When German institutional money first started investing in the U.S., some said that they invested in cities where high-end retail was in abundance.  Now, with real estate capital seamlessly flying around the world, it's interesting to see who invests where.  There is a lot of Israeli money being invested in New York and London commercial real estate these days.  Safe havens?  Only time will tell.  It's not just the institutional real estate investors that move like a herd; individual investors talk with each other, watch each other's deals and say, "Hey, do they know something we don't know?"  Fascinating!

So long to former New York City Mayor Ed Koch

In the book "Type A Behavior and Your Heart," authors Drs. Meyer Friedman and Ray Rosenman suggest that to objectively view oneself, every few years, you should write your own obituary.  For as much work as I have done rehabilitating the Type A behavior in me, I have yet to tackle this assignment.  It's not so easy…But what brought that to mind was reading the eulogy New York City Mayor, Michael Bloomberg, gave to former New York City Mayor, Ed Koch.  Even if you knew nothing of Mayor Koch you might appreciate reading the eulogy.  
Here it is.

Patience Required

As a fund manager I would think it's not easy to have reached the stage where an investor is prepared to invest with you and then keeps putting you off, month after month. You are told that everything will be finalized next week or next month; but then it’s not. 

Thomas Paine said in 1776, "These are the times that try men's souls."  In one way or another, we are living through a period where our patience is being tested.  And, no matter what type of situation, it's really all the same.  We want to make things happen and truly believe we can when we want to.

One of the biggest lessons I’ve learned (although sometimes I need to remind myself) is that if you push, the other side will push back.  If you lay back, there's an excellent chance they will come to you. It takes courage and faith to handle things that way, as it's often contrary to our basic nature.  But when I think of some of the best things that have ever happened to me, it's when I waited… and then waited some more. Patience truly is a virtue.

Mick Jagger and Keith Richards (need I identify them as the principal song writers in The Rolling Stones?) wrote, "You can't always get what you want but if you try sometimes, you'll get what you need."  We don't know for sure what they were thinking about when they wrote those lines and that's the beauty of poetry and music lyrics - we can interpret them ourselves.  But what's important for me in that famous line is that if, more often than not, you get what you need, you are way ahead of the game.  Appreciate what you have and try not to be disappointed about what you’re still looking for.  Life is not about all or nothing.  It's about all the places in-between.  Enjoy the journey!

On The Road Feedback

Last week’s piece about my brother Gregg elicited a number of responses.  Some of them left me teary.  Thank you for taking the time to share something of yourself with me.  The community that exists around this weekly column is extremely special to me.  As you would expect, different subjects resonate with people.  And, as I've learned over the years, there is a robust pass-along of certain columns - to a spouse, son or daughter, a friend or industry colleague.  It's an incredible feeling when someone whom I've never met comes up to me and says, "Steve, your column was passed along to me and I really liked it." If nothing else, sharing something of ourselves with our fellow travelers through life helps to connect us.

The World According to Mister Rogers

Fred “Mister” Rogers shared wonderful life experiences and observations with his TV audience.  While unpacking the remaining boxes from my move to New York, I found a cherished book called, "The World According to Mister Rogers: Important Things to Remember."  Please allow me to share a few of my very favorite quotes from this kind and gentle soul:

  • "The gifts we treasure most over the years are often small and simple.  In easy times and in tough times, what seems to matter most is the way we show those nearest to us that we've been listening to their needs, to their joys, and to their challenges."
  • "What makes the difference between wishing and realizing our wishes?  Lots of things, and it may take months or years for a wish to come true, but it's far more likely to happen when you care so much about a wish that you'll do all you can to make it happen."
  • "Some days, doing "the best we can" may still fall short of what we would like to be able to do, but life isn't perfect - on any front - and doing what we can with what we have is the most we should expect of ourselves or anyone else."

Mister Roger’s Neighborhood was a TV show for children…or was it?  Fred encouraged children to believe in themselves, to always try their best and to listen to their heart.  To be exposed to that philosophy at a young age provides solid building blocks for life.  His message, justifiably so, is something that will be passed down from generation to generation.

Just Curious - Does Size Matter?

On what device do you normally read this column?
Is the font too big, too small or just right on that device?
Kindly let me know.  Thank you for your feedback.


James Gibson who has accepted a summer internship with the J.P. Morgan Real Estate Banking Group.

C.H. Meili promoted to head the Real Estate Department at Colorado Public Employees Retirement Association.

David Gillan is now Head of Real Estate at New York State Teachers Retirement System. 
On The Road…

Feb. 20 – 21: IPD (Investment Property Databank) U.S. Real Estate Investment Forum (Launch of PREA / IPD U.S. Property Fund Index), New York, NY

Mar. 14 – 15:  IMN (Information Management Network) Bank and Special 
Asset Executive Conference on Real Estate Workouts, New York, NY 

Mar. 17-19:  NAREIM (National Association of Real Estate Investment Managers) 
Spring CEO Meeting, Santa Monica, CA

Apr. 1 – 5:  Meetings in Chicago, IL

Apr. 9 -10:  PERE (Private Equity Real Estate Magazine) Global Investor Forum, Los Angeles, CA

Apr. 28 – May 1:  CRE (Counselors of Real Estate) Mid-Year Meetings, New York, NY (To include jamming with the CRE Rock ‘n Roll band, Sound Counsel).

June 4 – 5:  PERE Summit (Private Equity Real Estate Magazine), London, UK

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