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Institutional Real Estate Americas

December 1, 2013: Vol. 25, Number 11

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  • Forecast 2014: Threats loom but fundamentals suggest a continuing recovery for the new year

    There is an African proverb that warns: “It is on the path you do not fear that the wild beast catches you.”

    In the fast approaching run-up to 2014, the many paths that find their convergence in the titanic real estate industry are not particularly frightening at this time. Indeed, the consensus is that 2014 will be a year of continued recovery, perhaps even increasing momentum. Still, one investment manager gave voice to what all sources interviewed for this story seemed to be thinking — that their bright assessments come with the proviso that no “exogenous event” unexpectedly strikes and cripples the still-fledging recovery.

  • That's rate news: An improving economy and capital flows help maintain cap rates, even as interest rates rise

    During the last several months, the financial markets have been adjusting to the Federal Reserve’s decision to normalize monetary policy. As a result, investors are worried about the possible impact of higher interest rates on real estate pricing. If 10-year Treasuries increase to a range of 4.6 percent to 4.9 percent during the next five years, as forecasted by Moody’s Analytics, today’s private real estate pricing, which assumes unleveraged total returns in the 6.5 percent to 7.5 percent range, is sustainable.

  • A world of haves and have-nots: Meanwhile, there is a whole lot of jiggling going on

    According to Sheila Hopkins, our managing director of Europe and infrastructure, the halls of PREA were swarming with frustrated investment managers who are finding it increasingly challenging to find takers for their latest investment offerings.

  • REITs make mad dash down Wall Street

    After a long hiatus, IPOs have made their return.

    No, we are not talking about Twitter. This is a tale of two acronyms. Two acronyms that are being increasingly commingled in the name of securitized real estate. Specifically, REIT IPOs.

  • Amstar takes big bite out of Turkey

    When the executives at Amstar Advisers talk Turkey, they are not speaking euphemistically.

    The investment manager recently opened its fifth and largest shopping center in one of the most exotic of the euro zone countries, and the former epicenter of the vast Ottoman Empire. Today, Turkey is a largely modern nation that proudly wears its status as one of the world’s fast-growth economies like a breastplate.

  • Flurry of industrial deals buttress property type

    Many real estate pundits are predicting industrial will be the star property type of 2014. But the sector apparently is not waiting for investors to bust out in “Auld Lang Syne” to begin its rampage.

    A number of large portfolios have changed hands this year. Two notable deals this fall are Liberty Property Trust’s $1.5 billion acquisition of a 177-property portfolio from Cabot Industrial Value Fund III, and Brookfield Property Partners’ $1.1 billion acquisition of Industrial Developments International and its 75-property portfolio.

  • Downside risk and leverage: Risk illusion redux

    Most real estate investors lack an intuitive but analytically rigorous way to think about downside risk. Ignoring downside risk can impair performance, especially in the presence of leverage, and promote risk illusion at the deal and portfolio levels.

  • Going global: NCREIF partnership launches worldwide index for unlisted real estate funds

    All real estate is local. Real estate is all about location, location, location, and it is easier to know your neighborhood than a neighborhood halfway around the world. So why are so many people interested in going global? The answer is capital. In today’s world, capital travels at the speed of electrons, and investors compare markets globally for the best investment opportunities.

  • ULI report likes industrial sector, secondary markets

    Ask 1,000 real estate industry players what 2014 will bring, and this is what they will tell you:

  • Property sales post 28% increase for 3Q

    U.S. property sales accelerated during third quarter 2013, with a 28 percent increase in dollar sales volume compared with third quarter 2012. That is a sharp increase over second quarter growth of 17 percent.

  • Where America is headed

    For more than 100 years, the movement of workers from poorer to richer states has pulled up the per capita incomes of both richer and poorer regions and lessened inter-regional income inequalities. A Harvard University paper titled Why Has Regional Convergence in the U.S. Stopped? shows this connection between rich and poorer regions has been severed since the 1970s.

  • Post-crisis aversion to risk may be creating risks of its own

    Driven by an overstated sense of risk aversion stemming from a crisis-hangover, investors continue to flock to core assets in primary markets with little notice of other investments.

  • Real estate standard bearers roll out REFER

    REIS and INREV have unveiled new and updated industry standards for measuring investment fees and expenses. Most notable is the creation of the Real Estate Fees and Expense Ratio. REFER is intended to give investors a standardized measure of fee drag, better facilitating expense ratio comparisons across products.