Institutional Real Estate Americas
March 1, 2013: Vol. 25, Number 3Buy For $250.00 Add to Cart
Megatrends: Seven powerful forces that are changing the direction of the institutional real estate business
Even during the most settled and least complicated of times, commercial real estate has been subject to a broad constellation of dynamics and variables. But these are far from settled or uncomplicated times. The world is changing and, in some cases, it is changing in ways most of us could not have fathomed a mere decade or two ago.
Real estate redefined: Investment firms rise to the challenge of getting more real estate options into defined contribution plans
TIAA-CREF has been investing directly in real estate for more than 60 years and now boasts a portfolio of direct equity investments in real estate of about $19 billion. Clearly, this is an organization that knows something about property markets.
Skin in the game: All parties seem to agree there is no hard evidence co-investment produces better performance
Selecting investment managers and structuring the proper kind of incentives and alignments of interest is an incredibly daunting job. Our databases currently track more than 600 managers worldwide with 800 different offerings, each of whom are vying for investors’ time and attention.
Asia calling: There is a clear opportunity for real estate investors to capitalize on the Asian Century
From the first century up until the industrial revolution, Asia Pacific was by far the dominant power in the global economy, as it has long been the most populous region. Industrialization allowed Europe and North America to greatly increase productivity and take the lead throughout the 20th century. In fact, industrialization has so greatly increased productivity that global output in the first decade of the 21st century is reckoned to have surpassed the sum total of global output in the first 19 centuries.
Choke point: The Panama Canal expansion has potentially big implications for U.S. ports and industrial markets
In 2015 a newly expanded Panama Canal, with deeper and wider navigational channels and a third set of larger locks, will be put into service. This long-anticipated event, as simple as it might sound, has been characterized as everything from a game changer to a near-term nonevent for industrial real estate markets.
True believers: The yellow brick road to fantastical returns
My son’s birthday is approaching, and I got to thinking about giving and receiving presents. It’s a great concept; for doing nothing except being there on a given day people offer you gifts. Sometimes people offer gifts that may not necessarily be appropriate for the child.
Carried interest: Tax treatment remains status quo
In simple terms, “carried interest” is the share of the profits from a partnership (or another entity that is taxed as a partnership) that is distributed to the general partner (who is often an adviser, developer or manager) of the partnership that is greater than the manager’s pro rata share of the capital contributed to the partnership. Carried interest is also often referred to as a “promote” or “incentive distribution.”
Investors favor real estate, especially core properties
Not only are the vast majority of investors satisfied with their real estate investments, they also think the asset class will provide the greatest risk-adjusted return in 2013. These are positive signs reflective of the ongoing turnaround in the real estate asset class.
TIAA-CREF and Norges Bank strike $1.2 billion JV
TIAA-CREF and Norges Bank Investment Management (NBIM), on behalf of the Norwegian Government Pension Fund Global, have agreed to a joint venture through which they will invest in office properties in Boston, New York City and Washington, D.C. The joint venture is already invested in prime office properties measuring 1.9 million square feet and valued at $1.2 billion.
- Canada 2013: No building, high prices
Fund closings: Big numbers, little consolation
Investment managers around the globe successfully closed fundraising on 86 real estate funds in 2012, raising $56.9 billion, the highest total since the market peak in 2008 when fundraising activity reached nearly $135 billion, according to Institutional Real Estate FundTracker.
Spate of billion-dollar deals kicks off new year
If the first 31 days of the year are any indication, 2013 could be a banner year for big deals. A flurry of billion-dollar real estate deals were consummated or announced in January.
Summit Capital places a stake in oil-rich Eagle Ford Shale
Deep in the south of Texas there is a gold rush in the form of the Eagle Ford Shale, which some are calling one of the largest oil and natural gas fields in the world. Like the Bakken Shale in North Dakota, it has caught the attention of both oil and gas companies, which are pumping billions into extraction operations, and real estate interests, which are looking to build all manner of asset classes to accommodate the human surge.