Institutional Real Estate Americas

January 1, 2014: Vol. 26, Number 1

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From the Current Issue


The CBD rides again: 20 years ago this magazine eulogized the moribund central business district, but it has since come back to life

“It was twenty years ago today…

The brief line that begins The Beatles’ titular song from the album Sgt. Pepper’s Lonely Hearts Club Band is a good place to start a story on central business district revival because it was approximately 20 years ago that The Institutional Real Estate Letter published a front-page story titled, “The Death of CBD: Can Office Properties Survive?”

But it is a good line for another reason. “Sgt. Pepper’s Lonely Hearts Club Band” is a baby boomer classic. And we all know what the baby boomers did. They moved to the suburbs.

Skip forward a lifetime and the people in the workforce today are the children of baby boomers, known as “millennials,” and we all know what they are doing: reversing direction, eschewing suburbs and moving back into CBDs. 


When Sergeant Pepper taught the band to play

Twenty-five years ago, I was hunkered down in the basement office of my old home in Montclair (an Oakland suburb), staring at the tiny flickering black-and-white screen of my little Macintosh Plus, waiting for what seemed to be an interminable amount of time between screen builds, as I switched from full screen to page view and back again.


Taking the high road: Do higher-yielding property markets pay?

To date, the U.S. real estate price recovery has been uneven; the top six major markets have outperformed, and non-major markets have underperformed. As a result, some investors are concerned that major market property pricing has become too expensive. This sentiment is prompting an exploration of less-appreciated markets. So, is it time to take the high road and pursue higher-yielding markets?


Prudential expands Latin American footprint

Things are going south for Prudential Real Estate Investors, down to where the weather and investments are hot.

More specifically, the company is expanding its Latin American presence and is focusing its monetary and human capital on Brazil and Mexico, the two largest economies in the region. PREI, which already has almost 90 people committed to Latin America research and investment activities — 75 in Mexico and the rest in Brazil and Miami — has recently hired four senior portfolio managers to manage its investments in Mexico, and one for Brazil. Yet another hire is in the offing.


U.S. REITs closing 2013 on a sour note

Cumulatively speaking, it looks like 2013 will be a year to forget for U.S. REITs.

Equity REIT returns ran into negative territory in November, and during the first 11 months of 2013 they posted a trifling 2.26 percent gain. That compared unfavorably with the S&P 500 Index, which rose 29.12 percent during the same period.


Report touts new investment strategy for a new era

The sun has set on real estate’s “era of acquisition” and it has risen on the “era of execution.” In other words, from 2008 to 2011, there was money to be made by acquiring assets whose value was temporarily decimated by the global financial disaster. Today, though, investors must create value. That means the investment strategy of the current era is value-add.


CPPIB sets its sights on India

While many investors are avoiding the vast, emerging nation of India — spooked by its political corruption, dismal infrastructure and labyrinthine bureaucracy — the Canada Pension Plan Investment Board apparently sees opportunity where others see impediments.


The danger zones: Successful management of three types of risk can help investors avoid financial catastrophe

Warren Buffett once famously noted that it’s when the tide is going out that you find out who is swimming naked. The financial crisis of 2008 once again shined a spotlight on risk-taking across firms and heightened institutional investors’ focus on risk management practices. Immediately following the crisis, investment firms across sectors dedicated significant resources to building or enhancing their risk management function and overall acumen. The process continues through today.


A new day has dawned; how will firms seize it?

After five years of uncertainty and caution, the global real estate market has survived without a second catastrophe. Investors are finally ready to ease back on risk aversion, expand past primary markets and begin chasing higher yields. But investor demands are very different from a half-decade ago, and it’s up to asset managers to find ways to adapt in a highly competitive fund market, while simultaneously preparing for rising interest rates and the eventual removal of accommodative policies implemented by the Federal Reserve. Navigating these murky waters is the focus of EY’s Global Market Outlook.


Getting real: Alternative allocations and real assets are catching fire, with some pensions committing up to 65 percent of portfolio value to the former

While the roadmaps U.S. tax-exempt investors are navigating are anything but parallel, a lot of them are purposefully en route to an alternative reality. That is to say, public pension funds and other institutions seeking more attractive risk-adjusted yields over time are boosting allocations to alternative asset classes as they de-emphasize traditional stocks and bonds.

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