PREA, Animal Murder, Networking: Women v. Men

This week, along with more than 900 of my closest friends, I attended the PREA Fall Conference in Chicago.  It's the semi-annual get-together of the institutional real estate world.  One smart change this year is that on the first day, after the PREA "official" reception, a number of managers joined forces for an "invitation only" cocktail party (see venue comment below).  Heretofore (is that really a word?) there have been several competing cocktail parties with everyone trying to attract the same 34 people (you know who you are!).  So, this is sensible and seems to indicate that there is a more collaborative feel these days which also runs to collaboration in taking down deals rather than competing and driving prices up.  I hope this is true as I believe that collaboration is the future (along with "Alternate Merge" which I am also a big believer in...and not just on the road).

So what did I take away from the PREA conference?

-Definitely less interest in commingled funds and more towards co-investment & club deals.

-Clear concern about the state of the world economies and politics and their current and future impact

-More 'new' managers getting into the game (these are typical real estate operating companies that have not approached institutional investors about investing with them).

-Still a lot of interest in investing in 'distress' in one way, shape or form

-Valid interest from U.S. institutional investors in investing with established managers in Asia and Europe

-Caution.  I wish I could say cautious optimism but I didn't sense too much optimism; sort of a 'what it is, it is' feeling.

-Consensus that we are not out of the woods and uncertainty about when things would start feeling good again

-Desire to keep things simpler rather than more complicated

A good industry friend of mine shared this with me about PREA:

There was a European cloud over the conference and I must say the mood I sensed is “frustrated.”   LPs are looking for distributions from older vintage investments,  GPs are looking for commitments, and people don’t seem to have much optimism.    

How many of you besides me had tears flood their eyes when reading or seeing the murder of animals that had been let loose by their cowardly and warped owner in Ohio this week?  The police defended their actions (Don't they always?)  I know, some animal rights people said the police had no choice.  Sorry.  Some local police force who were completely unprepared for anything like this just reveled in being big game hunters for a few moments.  Why couldn't all or at least a majority of those animals been tranquilized and saved instead of being killed?  In killing those animals, aren't we killing ourselves as well-aren't we all animals, trying to survive on the same planet, bring our off-spring into this crazy world and praying that mankind will not destroy itself?  How sad.   Who will save our souls? And, how dare that guy that owned these animals...letting them out....dooming them.

"All about Steve:"  For those that got my announcement last week or saw the article in PERE about my job situation, I appreciate your support as I received a overwhelming and heartwarming number of emails, wishing me well and offering to help in however they could.  At the PREA conference as well, so many people asked me what I was going to do next.  I can't tell you how that made me feel.  I am thinking about what the next chapter in my career should be, looking at myself and trying, as one friend told me, "to be my own career coach."  Part of that exercise is that I'm learning to appreciate myself more.  Also, to sit down and make a list of what I'm good at, what I like to do and how to combine those two into making a living.  There are a few very interesting conversations I'm having as we speak.  But, because this is a very important time in my career and my life ("Is there any other kind," Jack Nicholson would say to me (stolen and adapted from "A Few Good Men.") I want to take my time and do the right thing.  I'm looking at another 15 years of full-time work.  My father was very proud of working full-time until he was "79 and a half" as he used to tell people.  15 years is still a healthy chunk of time and ideally I'd like to get into something that will take me to 2026!   And, be true to myself.  Anyway, stay tuned!

Within the past few months (this is all about me right  :-) more and more people have been asking me, "So what's up with your music?"  The answer is this:  After more than two years in the making, our next CD, "Robot Mannequin" will be available before the end of the year.  This is another collaboration between my sons and I and an all-star cast of Chicago-based musicians.  "What kind of music is it?"  Impossible to describe as all songs different!

My good friend, Barbara Fish, is a career counselor based in Toronto.  Actually she and I were both summer camp counselors together years ago.  Camp counselor/Career counselor.  Hmmm, maybe they're connected?  Oh well, last week she forward me a piece called The networking gender gap and how to bridge it.  While there are few things in life that we can all agree on,  I know one of them is that, well, men and women are just plain different.  It's part of the attraction (I think).  Anyway, here are some snippets from that piece (If you'd like the whole article just email me with the word "Networking" in the subject box).

-Networking observers say that for men, networking is largely about selling themselves or a product, or trading information. They want their conversation to lead to a tangible result, such as a business lead, a sale or an introduction. They get straight to the point.

-Women, on the other hand, will often initiate an exchange with a pleasantry or a compliment (“Love your shoes”) and will converse on a range of subjects, regardless of potential professional benefits. Rather than thinking quid pro quo, they think “How can I help her? How can I connect?” One networking commentator on Linkedin put the difference succinctly: Men “start with a statement of their status ... Women create community.”

-Another key difference is that women use networks for what psychologists call “social comparison,” a process by which we understand ourselves and learn how to behave by comparing our attitudes and behaviors with those of others. 

-Sadly, women often don’t take advantage of their ability to connect. Here’s where they can take a lesson from the guys. Whereas men talk matter-of-factly about their accomplishments, women tend to undersell themselves lest they be seen as boastful. Or where a man might bluntly ask, “Could you please introduce me to ... ?” women are so nuanced about asking for assistance that a person whose help they seek might not even realize a request has been made.

Interesting stuff, right?

New:  NCREIF Research Center:  Jeff Havsy, Director of Research for NCREIF told me that there's a new 'button' on the top right hand side of their  home page.  This is a new section on the NCREIF website designed to answer a question that was posed by or to Jeff or one of the other members of the staff.  One piece that's posted is called Cap Rate:  Please Explain!  A really good value-add service to the industry.

New Book:  Real Estate Mathematics will be published next week by PEI Press.  "Real Estate Mathematics is a detailed and practical guide for private real estate fund managers and investors. Edited by David Lynn and Tim Wang of Clarion Partners, this guide features contributions from over 25 leading real estate professionals in the industry today that will shed light on some of the most challenging arithmetical problems that face private real estate today."  Congratulation you guys.

Restaurant of the week:  Sunda, 110 W. Illinois, Chicago, IL.  A multi-manager hosted cocktail party on Monday evening brought me to this place for the first time.  When you walk in, the dramatic design suggests an immediate, "Wow."  To call it Asian-Fusion is not fair; yes, there is a serious sushi bar but it's also a lot more than just sushi.  Actually, just go there.  Ask for Nicole who is the Director of Sales and Marketing and enjoy yourself.  Oh, did I mention that it's one of the hippest places in Chicago?

Congratulations to my friends Bob Weaver who is joining TPG Capital and Roman Bas who joined The Carlyle Group.

My, and I know the industry's, sincere condolences,  to the family of Keith Brown of Klaff Realty in Chicago who passed away recently.  Too young.  Too soon.  

Take care and safe travels.

Steve

Photo:  Sign at San Francisco International Airport.  I got a kick out of the last item.

On the road....

Nov. 4-11: New York including moderating a panel at the PERE Forum 

Nov. 15:  San Francisco to moderate a panel for JPMorgan

Jan. 18-20:  Laguna Beach, CA to attend the IMN Opportunity and Private Fund Conference

These are my views and not that of my employer.

Fall Conferences, Seth Godin, Tap Dancing

It's interesting:  This morning I sent an email out to a large group.  The number of "Out of Office" automated replies was surprising in some ways but in other ways it wasn't...it's just indicative of how much traveling people are still doing (or are they?).  Yes, this time of year there are all kinds of conferences and while the bean-counters in many firms have clamped down on travel expenses, when there's a "Must Attend" conference or meeting, people still should be permitted to go.  Our industry manages gazillions of dollars of money invested in real estate, much of it wisely invested for the benefit of retired people who are counting on getting their monthly check (I wonder what that would be like!).  Anyway, to seriously limit those folks that are managing that money from attending any/all conferences that they believe are important to them doing their job properly (and learning something along the way that may help them do their job even better) seems to me to be penny wise and pound foolish.

Some of my takeaways from one of the most stimulating sessions I've attended in quite a while given at the CBRE Americas Summit last week by Lara O’Connor Hodgson:

• What happens when what we know gets in the way of what we notice?
• “Why” is what you notice.
• “What” is what you know.
• We stop asking “Why?” because we're afraid to let people know that we don’t know something.
• Be a contrarian
• What would I never do?
• Defiance
• That won’t work-so how can I make it work?
• Creative Reconstruction
• Break down your assets/challenges and take each one away
• Scenario-based thinking
• Where would we never look?
• Laughter at an idea means something is working
• Innovation: look at a place completely differently and apply it to your industry
• Quotes from Dr, Jonas Salk (Polio Vaccine):
• “The answer is the question.”
• “Ask the right question to find the answer.”
• “You don’t invent the answer; you reveal the answer.”
• Fostering Innovation in Real Estate
• To succeed consistently over time you must understand key trends and time their activities accordingly
• Creativity:  the ability to look at the same thing as everyone else but see something different
• within 8 seconds of creating an idea, someone will tell you there’s something wrong with it-often it’s yourself.
• Suggestion: Wait 8 seconds before commenting/criticizing
• Real estate:  we literally change the world (buildings, cities, etc)
• We commoditize our projects.  So, if we change our thinking.....(i.e.  we think about how to get 10 cents more per square foot, etc).
• What drives value?
• What is unique”
• Don’t commoditize your product.
• Success vs. Significance
• Success is finite
• Significance is infinite
• If you’re focused on success you’re not thinking big enough.
• Innovation is driven by noticing human behavior.
• Your greatest solutions happen when you lack resources.
• If you quit with the first “No” you may be asking the wrong question.
• Don’t be afraid of coming back with another, “Why?"
• Force your brain not to be you!
• Your customer is not you-you have to get into their heads to understand their challenges/problems before you can come up with a solution
• Figure out who does something well-what makes them own their industry-and apply it to your business
• Look in places you’d never look-that is where innovation is-not at your competitors.
• In a down economy no one is talking-you can sneeze and get noticed.”
• Einstein:  “The world we live in today has problems that cannot be solved by old thinking

Seth Godin is a very interesting guy.  I was first introduced to his writing via one of his books called, "The Purple Cow."  He describes himself as a writer, speaker and agent of change.  I subscribed to his blog earlier this year and have found certain of his writings resonate with me.  He publishes every day and one from this week I share with you as I thought many of you would get something out of this:


Open Conversations or Close them.  

• A guy walks into a shop that sells ties. He's opened the conversation by walking in.
• Salesman says, "can I help you?"
• The conversation is now closed. The prospect can politely say, "no thanks, just looking."
• Consider the alternative: "That's a [insert adjective here] tie you're wearing, sir. Where did you buy it?"
• Conversation is now open. Attention has been paid, a rapport can be built. They can talk about ties. And good taste.
• Or consider a patron at a fancy restaurant. He was served an old piece of fish, something hardly worth the place's reputation. On the way out, he says to the chef,
• "It must be hard to get great fish on Mondays. I'm afraid the filet I was served had turned."
• If the chef says, "I'm sorry you didn't enjoy your meal..." then the conversation is over. The patron has been rebuffed, the feedback considered merely whining and a matter of personal perspective.
• What if the chef said instead, "what kind of fish was it?" What if the chef invited the patron back into the kitchen to take a look at the process and was asked for feedback?
• Open conversations generate loyalty, sales and most of all, learning... for both sides.

On Sunday I happened to catch the last half of "Dirty Dancing" on TV.  What a great movie.  How sad that Patrick Swayze died so young (57) another victim of cancer.  Watching that movie got me on to Youtube.  Many years ago, I worked for a company where one of the administrative assistants was the daughter of the famous dancer, Honi Coles (who also had a role in Dirty Dancing).  Check out this great dance routine.  Sad also that tap dancing like is from an era long gone. 

Congratulations to Paul Anthony DiCarlo who has joined Rockrose Development in the acquisitions group and Yokasta Baez who joined Pantheon as Vice President, Global Client Services in New York.  She was most recently with AXA Private Equity.

San Francisco Event:  Larry Souza, a very insightful guy is presenting the conclusions of his deep research project on real estate finance and capital market research, which includes monetary and fiscal policy analysis, public administration and political science, political economy and philosophical analysis.  It's on Tuesday, October 18th at 5:30-6:30 pm at Golden Gate University (536 Mission Street) in San Francisco, in Room 6208.  Larry says "You are all invited."

On the road....

Oct. 17-19:  Chicago for the PREA Fall Conference

Oct. 20:  Boston

Oct. 20-21: New York 

Oct. 24-28:  On the road...destinations TBD

Nov. 1-3:  Washington, DC to attend the CRE Annual Convention

Nov. 4-11:  New York including moderating a panel including at the PERE Forum

Nov. 15:  San Francisco to moderate a panel for JPMorgan.

These are my views and not that of my employer.

On the road...Asheville, Las Vegas, Steve Jobs

RCA Briefing Note:  As overall sales volume slowed sharply in Q3, foreign investors were bucking the trend by continuing to expand their acquisitions of US commercial real estate. With Asian and Latin American capital growing at the fastest rate, cross-border investment should top $5.0 billion in Q3 for the first time in four years and account for over 10% of market activity.

Sad news.  Wayne King of The Goldstein Group in New Jersey passed away at 52, another victim of cancer.  Wayne was the second employee at CREOL (Commercial Real Estate Online) which was one of those ahead of the times Internet ideas that didn't make it.  I worked with Wayne.  He was the architect that took Steve Oder's vision and made it real.  Wayne was a bright, interesting and just plain nice guy who had a heart.  I hate this cancer crap!

I spent time last weekend with my son, his wife and their two sons-yes, my grandsons, Sean (2+) and Gavin (one month) in their home in Asheville, NC.   A busy house to be sure!  Hanging out with Sean I was reminded about how kids find such simple ways of entertaining themselves, being entertained and entertaining us.  Things we take for granted, the trees swaying in the wind, the fog that appears on a window when you breath on it, running around and diving onto a couch, banging on a drum, laughing at silly words that your Grandpa teaches you (i.e.  Pizza Juice), listening to The Beatles while in the car seat of your Daddy's car.  It's wonderful to see and served as a great reminder to me about how there are so many simple things in life that we just take for granted, or overlook or, don't have time for.  It's these simple things, most of them with no cost involved, that can give us pleasure every day if we just take a minute to appreciate them.  Btw, Asheville is very cool.  It's like a time warp in some ways back to the late 60's/early 70's.  It's a college town with a vibrant restaurant, shopping and music scene.  There's also a lot of 'real green' (trees) in and around that beautiful part of America.

Dig This! 

The world's first Heavy Equipment Playground:  Where you can relive your childhood sandbox days.   It's in Las Vegas, not far from the Strip and this week I had a chance to experience it for myself.  It's the kind of thing that you will keep telling people about.  It's fun by yourself (but more fun with a group) and it's run in a first-class and extremely safe way.  Some participants were on the bulldozers and I was on an excavator (see below).  It's a really cool thing to do and this is the only place in the world (for now) where you can do it.  It's attracted people of all shapes, sizes, ages and genders and is the #1 attraction/thing to do in Las Vegas on Tripadvisor.com.  I met a couple of guys whose wives gave it to them as a birthday present.  It's also a perfect venue for 'team building.' Special Offer:  Because I have a connection with the ownership of Dig This, they have authorized me to offer a 25% discount to anyone who mentions my name when they make their reservation.  

Dig This site:  I drove this heavy machine (there's a better picture here).  Didn't do as well as the other two drivers but I had tons (140,000 pounds worth) of fun.   

I heard some very good stuff this week from a very interesting speaker but I want to take some time to digest what she said before I share my takeaways with you....next week.

"A legendary hero is usually the founder of something-the founder of a new age, the founder of a new religion, the founder of a new city, the founder of a new way of life.  In order to found something new, one has to leave the old and go on a quest of the seed idea, a germinal idea that will have the potential of bringing forth that new thing."  Joseph Campbell, Hero with a Thousand Faces. 

Steve Jobs:  he had a vision that was right on as far as what the world wanted/needed and how Apple could fill that need.  But identifying a customer need isn't what Jobs was all about; he created a need but having not just his fingers but his whole being on the pulse of the future.  He figured out who his customers were and what they wanted.  There have been some folks, in our lifetime and throughout history, who have had the same 'seventh sense' and perhaps it's because Jobs made his mark in an era of unprecedented media coverage and Internet connectivity, that he's achieved the status that society is putting on him.    Originally, Mac users were a cult; going against the grain of the PC.  They did 'think different' and now there are many of us who are using Mac's and other Apple products and it seems like more and more are adopting them.  PC use is still in the majority...particularly as companies, for the most part, use them.  But from a personal perspective, how many of us use a PC and related peripherals for work and an iPhone, iPad, Nano (is that still the current thing for music or are people just using their iPhones for everything) for everything else?  At a time when the world needs more heros, Steve Jobs will go down as one of them.  


Congratulations to my friends, Joan Matera who has joined JPMorgan as a Senior Credit Banker in their Real Estate Banking Group and Hugh MacDonnell who has joined Clarion Partners as a Managing Director in their Capital Raising group.

On the road....

Oct. 10-15:  Northern California

Oct. 17-19:  Chicago for the PREA Fall Conference

Oct. 20:  Boston

Oct. 20-21: New York including seeing my new grandchildren, Edie and Benjamin (yup, lots of grandkids!)

Oct. 24-28:  On the road...destinations TBD

Nov. 1-3:  Washington, DC to attend the CRE Annual Convention

Nov. 4-11:  New York including moderating a panel including at the PERE Forum

These are my views and not that of my employer.  This column is written on a MacBook.

On the road with Steve Felix

As I promised to the audience at the PERE Global Forum in Amsterdam last week here is the Summary of Key Findings & Trends from a Compensation Survey that was recently conducted in the real estate investment industry (U.S.).  46 companies participated:

1.  After two years of declining compensation, pay levels for performance year 2010 were up, but still below pre-recession levels at most companies.

2.  88% of participants raised salaries in early 201, with most increases falling in the 3-5% range.  Increases were most prevalent for mid-level and junior professionals.

3.  76% of participants paid out larger bonuses for performance year 2010 than they did for performance year 2009, with amounts at or above target levels in most cases (60% of respondents)

-Executive managers fared the best:  median increase of 31% and average increase of 70%

-Less than 10% of firms reduced bonuses, whereas over 40% reported doing this in last year's survey

4.  Year-over-year changes in long-term incentive awards varied considerably among participants

-Roughly half of participants (52%) increased long-term incentive awards for performance year 2010, with the remaining companies split between keeping long term incentive awards flat (24%) and reducing it (24%)

5.  Looking ahead, most firms expect to increase pay for performance year 2011, but at relatively modest rates due to uncertainty regarding how the rest of the year will pan out from a performance perspective

-2012 salary increases are expected to be 3-4% (on average), although a meaningful number of firms (24% of participants) expect to keep salaries flat (only 11% took this approach in 2011)

-44% of participants expect to pay out larger bonuses, most of whom expect 1-20% increases over performance year 2010 levels, while 41% of participants expect to keep bonuses flat (18% reported this in 2010)

-long-term incentive awards continue to vary by company, and eligibility parameters may broaden at some firms.

This week I was a guest at the NAREIM (National Association of Real Estate Investment Managers) Executive Officers Mid-Year Meeting.  It was the first NAREIM meeting with Gunnar Branson as President of the organization.  The attendees are typically very senior executives from investment management firms who get together and share openly.  It's a comfortable group and I had the opportunity of meeting a number of senior industry folks that I hadn't known before.  If you're an investment manager, it's a good organization to check out.  In addition to the business benefits, there was a mentalist entertaining us at the closing dinner.  I had seen him perform once before at a CBRE event.  The stuff he does just makes you shake your head in amazement and smile with the joy of someone doing something you can't (and don't care) to figure out.  He also has a great dry sense of humor (and you appreciate it more if you have one too!).  He's memorable.

Here are some of my takeaways from the NAREIM event:

1.  Industry consolidation and capitalization trends

     a.  Real estate M&A activity:  Who are the buyers?  Wealth management firms (smaller transactions); Money management firms; Financial firms; Insurance companies & Bank/Trust companies.

     b.  Insurance companies are showing more interest in acquiring real estate companies

     c.   Advice when looking at a company to acquire:  Go for growth and opportunity; get out in front of the growth opportunity

     d.  "Once you're labelled an "Emerging Manager" you may never be able to get away from that label."

     e.  Deal environment panel comments:

          (1)  "People are adjusting their thinking re: price discovery which makes more transactions possible."

          (2)  "As time has progressed its gotten tougher and tougher to underwrite deals to make sense."

          (3)   "We're proceeding with caution; but we're proceeding."  Large institutional real estate owner

          (4)   "Investors are dialing back assumptions and elongating absorption."

          (5)   "For the first time we're seeing Sovereign Wealth Funds investing "off the coast."

          (6)  "I see 2012 as a very difficult year."

A friend and very talented artist, Shannon Corey, has announced the following shows.  Unfortunately I won't be able to attend either but if you're in NY or Philly and like singer-songwriters (she's a piano player) you should check her out:

1. Mon, Oct. 3rd - NYC - Birthday Show - The Bitter End-free download and cupcakes - Amazing

2. Wed, Oct. 5th - Philly - UPenn - to get in you have to be on the 'list.'  Write directly to Shannon and she'll get you on the list (shannoncorey88@gmail.com).

I got an email from a friend in Europe who got this from a friend which I pass along to you even though I have no stomach for political rhetoric but I know that a lot of folks will find these comments interesting:  "Last night I attended a dinner hosted by Nigel Bolton (head of European equities at Blackrock) who on the previous night had dinner with Frau Merkel with a small number of European investors.  Merkel believes the IMF is trying to force EU into leveraging the EFSF fund but this is basically a US scheme. Q. What is the EFSF? A. As part of the overall rescue package of €750 billion, EFSF is able to issue bonds guaranteed by EAMS (Euro Area Member States) for up to € 440 billion for on-lending to EAMS in difficulty, subject to conditions negotiated with the European Commission in liaison with the European Central Bank and International Monetary Fund and to be approved by the Eurogroup. Merkel says this is a non runner... It would be Unconstitutional in Germany. She is totally is against this. Her view is this crisis will take time and there is no short, easy solution.  She was very negative on the US and their response. Her tone was a shock to those investors listening. She was more positive on the long term benfits of the EUR as long as the peripherial countries focused on balanced budgets.... Spain & Ireland OK. Greece - "we can only get the PM to do things if we half drown him... He didn't want want help last year but we have to force him into this life support system."  

Reuters Real Estate has revamped its site and is in their Beta test period.  They have made some excellent updates and there's a lot of good information and other stuff there.

Remember:  There are only a few seats left for The Nick Tyrell Memorial Seminar on October 12 in London.  You can register and contribute here.  It'll be an educational and beautiful day honoring the memory of an industry influencer and beautiful guy.  

A find in Amsterdam.  So I had a little break during the PERE Forum in Amsterdam and was walking down the street and walked by a very interesting window display.  I couldn't figure it out right away but it looked like a place where I could buy something for my wife.  I went in and realized that it was a massage place called 'doctorfeelgood.'  I hadn't had a massage in ages and after studying the menu board, made an appointment for the next morning.  After the massage, which was long overdue (I hadn't realized how much stress had built up), I was sitting,  zone-ed out in a peaceful place and sipping water, when in front of me I noticed hanging on the wall, two large framed montages and went to take a closer look.  There were a lot of backstage passes to rock concerts and a lot of hand-written notes of thanks from some very well-known rockers.  They were all addressed to the owner of the salon who I learned had been a go-to massage person for rock musicians on tour for a number of years.  It's a great place.  

doctorfeelgood, Scheldestraat 16, Amsterdam.  I may actually start getting monthly massages but it's really a luxury for me right now.  Anyway, enjoy!

On the road....

Sept. 30-Oct.3:  Asheville, NC to visit my grandsons Sean (2+) and Gavin born Aug. 25.

Oct. 3-6:  Las Vegas to attend and be on a panel at the CBRE Summit.

Oct. 10-15:  Northern California

Oct. 17-19:  Chicago for the PREA Fall Conference

Oct. 20-21: New York including seeing my new grandchildren, Edie and Benjamin (yup, lots of kids!)

Oct. 24-28:  On the road...destinations TBD

Nov. 1-3:  Washington, DC to attend the CRE Annual Convention

Nov. 4-11:  New York including moderating a panel including at the PERE Forum

6:55am California Time-Posted in-flight.  Amazing!

These are my views and not that of my employer.  

PERE Global Forum/Are we in the wrong business?/Solving the European financial crisis

I'm sending this out while I can.  I'm in Amsterdam and shortly will be off-line until Friday evening when I return to New York after a really long flight that takes me from Amsterdam to Moscow (10 your layover there) and then on to New York.  The price of the ticket when I booked it was really good but it's going to be a long 24+ hours. 

Some notes and quotes from this week's PERE Global Forum in Amsterdam:

1.  Today's market:  Overcast with frequent violent storms.

2.  There are many investment opportunities available today if you have equity; it's difficult to raise equity unless you have a significant track record or niche strategy; specialist managers are in vogue.

3.  In the past 90 days the world has come to a screeching halt.

4.  The denominator effect exists again as equities are down.

5.  Someone is going to create a better mousetrap.  You need a compelling story about why pension funds should invest with you.  Otherwise it's like shifting deck chairs on the Titanic.

6.  This is the most difficult period to predict in my 25 years as an economist because it's all about politics.

Hidden gem-Amsterdam:  In the same low-cost vein as my flight this week, I found a wonderful three room apartment literally a two minute walk to the PERE conference venue.  I'm pretty lucky with these type things and will probably continue to seek these accommodations out as some of the rates charged by some conference hotels are, well, in my opinion, just too much.  Here's my hidden gem of a place:  BoekEnzo.  If you contact them please send Joost my regards.

At the PERE Global Forum in Amsterdam this week, a good friend of mine came up and told me that he had woken up that morning with a thought about the financial crisis in Europe.  He feels it resembles an already tired marriage going sour and there are four options that can be pursued:

1.  Ignore it:  Didn't work; won't work.

2.  Let's muddle through it.

3.  Forgive them; here's a gift (i.e. bail Greece out); let's truly make up (i.e. what ever caused the rift won't happen again) although in the case of Europe it's all about politics and lack of trust.

4.  Break up the EU (Euro Currency Countries).

Sounds like there may be some common sense to this but since when do things that involve money and politics operate with common sense?

Here are some interesting numbers about the Private (not real estate) Equity world 

(Source:  Private Equity International).

1.  10 Weeks.  How long it took Vista Equity to raise $1.6Bn for it's fourth fund which included some LP friendly terms.

2.  $4.5Bn.  Amount of capital raised by Berkshire Partners for its' eighth fund.

3.  50% of LP's expected to increase their private equity allocations in the next year.

4.  $80Bn.  Amount of private equity deal volume in the first half of 2010.

5.  $130Bn.  Total private equity deal volume for the first half of 2011.

6.  $240Bn.  Estimate of total private equity deal volume for 2011.

7.  $14Bn.  Amount changing hands in the global secondaries (not real estate) market in the first half of 2011.

8.  22.5%.  CalSTRS return from their private equity portfolio for the 12 month period ending 6/30/11.

9.  $3.00.  Average amount a GP makes in management fees for every $1.00 of performance based carried interest.

Question: Are we all in the wrong business?!

I found this on the placemat at a restaurant in Amsterdam this week and thought you'd like it:  "The spirit of "ichigo ichie"-a Japanese phrase derived from the tea ceremony means, "Treasure every encounter, for it will never recur."

And this one which I saw on the wall in the New Jersey Transit waiting room at Pennsylvania Station in New York:  "Loud in the quiet night, warning me not to mistake a hill for a mountain."  Sometimes you find something like this at just the right time in your life don't you think?

Deep-thinking moment of the week:  World cultures don’t agree too often but I believe it’s safe to say that right now we all agree on one thing:  that nobody know what tomorrow will bring in any facet of our lives.

Other than being a a professional musician, I am a life-long real estate person.  I truly believe that the real estate business is not about buildings or cash flows or IRR’s: it’s about people.  And as our industry has become truly global, we have been able to do business with people in other parts of the world based on one simple word:  trust.  We have learned and continue to learn that we can trust each other and while trust takes time to develop it has to begin somewhere.  

I see our industry as ambassadors of building bridges between regions and cultures and in doings so, between people.  Coming together in forums like this week’s PERE Global Forum in Amsterdam gives us a chance to talk with and learn more about each other.  Representatives from many countries attended this event.  Some will become friends and people who end up doing business with each other.  But more than someone to do a deal with, we are all in this  together and from time to time we all need someone we can lean on.  Meeting someone and exchanging a handshake and a business card is just the beginning.  To connect with each other takes some effort.  The one area I’ve observed that could use some more effort is in the follow-up.  So, in the spirit of community and collaboration, I offer this challenge to you: within three days of attending a conference, write an email to everyone whose business card you collected and simply say, “Good meeting you at the XYZ Conference.  Looking forward to staying in touch.”  I don’t care how many cards you collected; this process doesn’t take long (I incorporate it with the entering of a persons’ contact information in my database.)  Of course, some of the connections will result in more substantive follow up communication about a deal that was discussed or a service being offered.  And that’s great.  But at a minimum, if we simply take that handshake, that exchange of business cards and that look into one anothers eyes just one step further we have contributed in a small way to bringing the world closer together.  And isn't that be a wonderful legacy to leave the next generation?

On the road:

September 26-28:  Colorado Springs to attend the first NAREIM Executive Officers Meeting hosted by their new CEO, and my good friend, Gunnar Branson.  

September 20-October 3:  Asheville, NC to see my newest grandson, Gavin, for the first time.

October 4-6:  Las Vegas to attend and be a panelist at CBRE's Americas Summit.

October 17-19:  Chicago to attend the PREA conference

November 1-4:  Washington, DC to attend the CRE Annual Convention

November 9-10:  New York to moderate a panel at the PERE Forum

These are my views and not that of my employer.

"You may be walking around lucky and not even know it."

There are very few 'life-changing' moments that I can remember experiencing but this past week I had one.  It came in the unexpected form of a meeting I had with someone I had never met before.  And, as our conversation evolved, it was pretty clear that we had connected at some level, finding that some of our beliefs, about people, about business and other things had similarities.  But 3/4 of the way through our meeting, he told me something he had observed about me, in a very constructive way.  I sat silent and motionless for a few seconds, digested what he had said, and then simply said, "You're absolutely right.  That's a very helpful observation.  I can't thank you enough."  What he told me isn't really important (except to me :-)  What is important is that once in a blue moon, you meet someone who shows interest in you, as a person.  Whether this fellow and I ever end up doing business together doesn't matter.  What matters is that he and I connected as people.  I had the tables turned on me for the first time in I can't even remember how many years as he wanted to help me!  It was huge and I woke up the next morning feeling different about myself....in a positive way.  There's a line in one of my favorite movies, "Let it Ride", when Richard Dreyfuss is having, in his words, "a good day" (which was not usual for him), and he walks up to a waitress he knows at a food stand in the race track; they banter a little as he orders a hot dog; and then with a very piercing but kind stare she turns around, points a 'magical' finger at him, and says, "You may be walking around lucky and not even know it."  In his case it was about betting on horses.  In my case, it's about changing my life.  


Too many of the conversations I had this week end up with the same theme:  "What the heck is going on in the world?"  And, because most of the conversations I have, at least during working hours, are about real estate that translates to "Where are we heading?"  Well, as I think we all know, but may be reluctant to admit, we're either stalled or slipping backwards.  In a preview of their August "Month in Review", which will be published next week, RCA has moderately lowered their 2011 transaction volume projections.  An email I got from RCA Editorial Director, Peter Slatin states, "The slowing likely reflects greater unease about the broader economy as well as the recent pullback in CMBS originations and tighter credit availability from other lenders as well." 


I totally agree.  But I believe, in general, that it's simply a feeling of total uncertainty about so many things that have put people into a funk.  The answer simply is:  We just don't know.  We no more know what's going happen tomorrow than we know what will happen in a month, six months, a year, five years.  All we are pretty sure about is what we know that happened yesterday. And what we can do, while the world is, hopefully, sorting itself out is to focus on those things that we can change and make a positive impact on.  While these are the kinds of times that try mens' souls, these are also the times when we learn more about who we really are.  And, to me anyway, there is nothing more important than being true to yourself.




Update:  The Nick Tyrell Memorial Seminar.  October 12, 2011.
You can register here (it's free to attend) and I'll send you a link next week about how to donate to the fund set up in Nick's name.  The program for the day looks great with presentations by a number of the leading industry thinkers.  My colleague, John Gellatly, and Paul McNamara will deliver the eulogy.  If you can, please attend.



Congratulations to my friend, Jeff Fisher, who was appointed by both ARGUS and RCA to the position of Senior Global Consultant strengthening and further aligning the partnership of the two companies.


Memorable Experience of the Week:  Kitchak Cellers, Napa, CA.  Many months ago, I met a couple while having dinner by myself at the bar in a Napa bistro.  They offered me a taste of the wine they had brought with them.  It was delicious.  I learned that it was wine that they make themselves.  But in another amazingly small world encounter, Peter Kitchak is a career commercial real estate consultant.  So, with that as the backdrop, last weekend, after months of back and forth about trying to schedule a day for us to stop by their place, we finally made.  Not having gone on their website beforehand, I truly had no idea what to expect.  But if you go on their website, you will have an idea and what you see there truly exists and is even more special in person.  Kitchak is a private winery with tastings by appointment only.  They have a wine club with a significant membership and Patricia and Peter Kitchak are very nice, interesting and passionate people.  If you are serious about wine I encourage you to contact them next time you are in the Napa area.  But, if that may be a while out, I can, without reservation (no pun intended) highly recommend their wine which you can get via their wine club.





On the Road:


September 21-22: Amsterdam to attend and moderate a panel at the PERE Global Forum.
September 26-28:  Colorado Springs to attend the NAREIM Executive Officers Meeting.
September 30-October 3:  Asheville, NC to visit see my newest grandson for the first time.
October 4-6:  Las Vegas to attend and be a panelist at CBRE's Americas Summit.
October 17-19:  Chicago to attend the PREA conference.
November 1-4:  Washington, DC to attend the CRE Annual Convention
November 9-10:  New York to attend and moderate a panel at the PERE Forum
November 17-18:  Frankfurt to attend and moderate a panel at the PERE Forum-Europe

These are my views and not that of my employer.

Good Ole Days, Nick Tyrell, Dreams and ice cream

Matt Slepin and his colleagues at Terra Search Partners publish a regular piece called Viewpoints.  Yesterday their most recent issue hit my mailbox.   I thought you'd find this section particularly interesting.


"At the beginning of this year, it felt like we were exiting the darkness of the recession. There seemed to be a light at the end of the tunnel, a glimpse that maybe we would indeed return, although cautiously, to the realm of the Good Ole Days. CMBS 2.0 was gaining momentum, investment sales volume seemed to be returning, and indeed our search business felt back on a roll. But the second quarter brought us back down to reality as employment remained flat, CMBS 2.0 fell apart, and the ripples of the failed debt reduction talks, the S&P downgrade, and the parallel dysfunctions in Europe sunk in. Now it feels as though the first quarter was the effect of pent-up demand and the settling into the New Normal versus a return to the Good Ole Days.  Real estate in the US is saying crazy, contradictory things. Multifamily is the one sector with largely positive long term drivers. The other sectors all seem more affected by secular changes – technology, globalization, and corporate efficiencies all have deep and obvious impact on the other major real estate “food groups.” Hospitality is, as always, more volatile and the bottom in the residential sector sadly still seems to be several years out."


Special Event:  The Nick Tyrrell Memorial Seminar : Applying Research Insights to Real Estate Investment Management: 


Nick was a friend of mine as he was of many in the industry.  This looks like a great program with some of the leading Research/Investment Strategists in the industry in attendance.  Unfortunately, I will only be able to attend in spirit.  The seminar will be used to raise money for the Nick Tyrrell Memorial Fund, which will present awards to papers that combine academic discipline with practical insights for the real estate profession. The event is being hosted by JPMorgan Asset Management, Nick's last employer and is being held on October 12 at 4pm to 8pm at Victoria Embankment, London.  I will include more details as I get them.


This quote, sent to me yesterday by a good friend, really hits home:  "We live in a moment of history where change is so speeded up that we begin to see the present only when it is already disappearing." Ronnie Laing


I don't dream all that often.  I've been trying to corollate my dreaming being associated with when I eat ice cream just before going to bed...but I'm going to have to keep testing that thesis!  But early this morning I woke up from a dream and just couldn't go back to sleep.  I dreamed about getting up and calling my father.  Just to see how he was doing.  The problem is that he died in November 2009.  I guess in my dream he was still reachable by phone.  But, I remember what one of you guys wrote me when I was spending a lot of time with my Dad in his final months:  you can talk with him anytime you want.  I remembered that just now and decided to close my eyes and have a chat with him.  He really didn't want to talk much about how he's doing and what type of things he's involved with...perhaps he's not allowed to divulge that kind of stuff.  But he did listen to what was on my mind and these days there are a few things that should be keeping me up at night.  It's been a good early morning for me, simply the ability to reach out to my Dad and also to write about this to you.  Actually, the more I think about it, I'm pretty sure the dreaming is due to ice cream but maybe it's only specific flavors.  More research is definitely in order.


Enjoy your weekend.


Steve


P.S.  My cousin, Jeff Smiley, went to the Air Force Academy and flew B-52's in Vietnam.  More than 20 years ago, at age 41, he died of some type of leukemia.  After the funeral ceremony, attended by hundreds of people whose lives he had touched, I went back to his house and found the following poem, framed and hung on a wall.  My old classmate, Peggy Noonan, drew from this for President Regan's speech after the Challenger disaster.  Even though  it's been adopted as a mantra by pilots, I thought it also had meaning for those who had innocently boarded those airplanes on September 11, 2001.  I offer it to you in honor of their memory. 

High Flight

Oh! I have slipped the surly bonds of earth
And danced the skies on laughter-silvered wings;
Sunward I've climbed, and joined the tumbling mirth
Of sun-split clouds - and done a hundred things
You have not dreamed of - wheeled and soared and swung
High in the sunlit silence. Hov'ring there
I've chased the shouting wind along, and flung
My eager craft through footless halls of air.
Up, up the long delirious, burning blue,
I've topped the windswept heights with easy grace
Where never lark, or even eagle flew -
And, while with silent lifting mind I've trod
The high untresspassed sanctity of space,
Put out my hand and touched the face of God.


Pilot Officer Gillespie Magee
No 412 squadron, RCAF
Killed 11 December 1941





On the Road:


September 11-16:  New York (Yes, I am flying to New York from San Francisco on Sept. 11)
September 20-21:  Amsterdam to moderate a panel at the PERE Global Forum
September 26-28:  Colorado Springs to attend the NAREIM Executive Officers Meeting
October 4-6:  Las Vegas to be a panelist at CBRE’s Americas Summit on “The Commercial Real Estate Industry of the Future: A 5-10 Year Outlook.”
October 17-19:  Chicago to attend the PREA fall meeting
November 1-4: Washington, DC to attend the CRE Annual convention
November 9-10: New York to moderate a panel at the PERE  Forum-North America
November 17-18:  Frankfurt to moderate a panel at the PERE Forum-Europe

Congratulations to my friend, Peter Lewis, who has just joined the consulting firm Towers Watson as head of their U.S. consulting business.

These are my views and not that of my employer.