Real Estate Investing “ Now More Than Ever”
description
Transcript of Real Estate Investing “ Now More Than Ever”
![Page 1: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/1.jpg)
Real Estate Investing“Now More Than Ever”
2013 IBEW Eighth District Progress MeetingJackson Hole, Wyoming
May 28 - 30
![Page 2: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/2.jpg)
A New Reality
• World Emerging from the Worst Economic Crisis Since the Inception of “Globalization”
• Most Developed and Developing Economies Inextricably Linked
• Prosperity Lifts All Boats but No One is Immune From Geo-political and/or Financial Contagions
![Page 3: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/3.jpg)
The Search for a New Equilibrium• U.S. Economy is Facing a Protracted Economic Slump, One that Could Last a
Decade or More
• The Recent Rally in the “Dow” has been Accompanied by the Weakest U.S. GDP Growth of All the Bull Markets since 1949
• Paul Volcker Predicts that U.S. Structural Employment will Eventually Stabilize
Significantly Above the Historical* Rate of 5.81%
• Warren Buffett Warns that Bond Prices are a Terrible Investment Today with Prices Artificially Inflated due to the FED Buying $85 Billion of Bonds a Month
• This Suggests a Challenging Investment Environment Especially for Those Programs with Actuarial Targets such as Pension Funds * Year 1948 through 2012
![Page 4: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/4.jpg)
![Page 5: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/5.jpg)
Not-So-Great Expectations
Expected Real Returns on 60/40 Equity/Bond Portfolios (%)
Source: AQR Capital Management
![Page 6: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/6.jpg)
Typical Pension Fund Asset Allocation
HEDGE FUNDS
FIXED INCOME
PUBLIC EQUITY
ALTERNATIVES
PRIVATE EQUITY
REAL ESTATE
OTHER ALTERNATIVES
![Page 7: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/7.jpg)
10-Year Forward* Inflation-adjusted ReturnsAnnual % Change, Low/High
ASSET UNITED STATES EUROPE BRITAIN
Cash -0.25/1.50 0.50/1.75 0.75/2.50
Government Bonds -4.00/1.25 -2.50/1.25 -3.75/0.50
Credit ** -3.00/3.25 -2.75/3.00 -3.50/2.50
Equities -1.00/8.00 0.75/9.50 1.00/9.00
Property 0.25/8.75 1.00/9.50 0.65/8.00
* 12/31/12** Investment-grade Corporate BondsSource: Standard Life Investments
![Page 8: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/8.jpg)
Volatility*
20 YEAR PERFORMACE & RISK
NCREIF ODCE
NAREIT S&P 500
Return 7.9% 10.7% 8.5%
Risk 7.0% 22.3% 18.2%
Private Real Estate has Lower Expected Risk/Return Profile than Publically Traded Equities
Source: FTSE NAREIT All REITS, NCREIF (Open-end CORE Equity Index), Morningstar, as of 9/30/12* METRIC: Units of Return for Unit of Risk
![Page 9: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/9.jpg)
Diversification
Correlation Coefficient
Large CAP Stocks .17
Core Bonds (.07)
T-Bills .37
Commodities .22
Low Correlations to Publicly Traded Equities and Fixed income
Source: Morningstar, Data as of 9/30/12
![Page 10: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/10.jpg)
Inflation Hedge
Total Return is a Function of Income + Appreciation
Construction Costs Tend to Increase with Inflation
Lease Provisions Tend to Allow Rents to Move with Inflation
![Page 11: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/11.jpg)
Collateral Benefits
Job Creation for Plan Beneficiaries
Support for Contributing Employers
Contributions to Benefit Plans
![Page 12: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/12.jpg)
A Significant Asset Class
• 2012 Total US Real Estate Investing and New Construction Equals $2.3 Trillion
• This Activity Created Jobs for 6.9 Million Domestic Workers in 2012
• This Activity Generates 15% of US Gross Domestic Product
Sources: U.S Bureau of Economic Analysis / U.S. Bureau of Labor Statistics
![Page 13: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/13.jpg)
Pension Fund Commitments Increase • In 2012 US Pension Funds Increased Equity Commitments to
Real Estate Investments by 29% • This Represents a $31 Billion Increase in Total Investment over
2011
• Commingled Funds Accounted for 58% of all Equity Committed
• Commingled, Open-ended Funds Became Much More Popular in Second-half of 2012 When They Accounted for 20% of All Investments
Source: FPL Associates Consulting
![Page 14: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/14.jpg)
Progressive
• NEBF Pension has been Investing in Real Estate since 1947
• This is 20 years before Real Estate was Recognized as an Acceptable “Asset Class” for Pension Plans
• NEBF Real Estate, an In-house team of Real Estate Professionals, was established in 2000
![Page 15: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/15.jpg)
Foresight
• In 2010 NEBF Real Estate Transitioned to National Real Estate Advisors LLC
• NREA is a Wholly-owned Subsidiary of NEBF
• NREA Now is Able, Under SEC Regulations, to Offer its Advisor Services to the Electrical Industry At-large
• This includes IBEW Local Plans
![Page 16: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/16.jpg)
![Page 17: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/17.jpg)
$1.4 Billion
![Page 18: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/18.jpg)
12.04% *
* Past Performance is No Guarantee of Future Success
![Page 19: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/19.jpg)
![Page 20: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/20.jpg)
$5.25 Billion in New Construction
14 Million SFof New Projects
27 MillionMan-hours of Work
![Page 21: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/21.jpg)
![Page 22: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/22.jpg)
$1.0 Billion
![Page 23: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/23.jpg)
BUILD-TO-CORE
![Page 24: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/24.jpg)
![Page 25: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/25.jpg)
![Page 26: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/26.jpg)
![Page 27: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/27.jpg)
![Page 28: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/28.jpg)
PENSION PLANHEALTH PLAN GENERAL FUND
![Page 29: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/29.jpg)
![Page 30: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/30.jpg)
![Page 31: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/31.jpg)
The ConfluenceDenver, CO
• 34-story High-Rise• 291-Unit Class A Units• 8,300 GF Retail• 300 Above Ground
Parking Spaces• NREA = $34.5 Million
Equity• TPC = $98.6 Million
![Page 32: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/32.jpg)
![Page 33: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/33.jpg)
Sabey Data CentersAcross the U.S.A.• Largest Privately Held Domestic
Data Center Company• 1.5 Million SF of Stabilized
Property• 2.0 Million SF under
Development• $125 Million Preferred-Equity
Investment• $100 Million Debt Investment
![Page 34: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/34.jpg)
![Page 35: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/35.jpg)
![Page 36: Real Estate Investing “ Now More Than Ever”](https://reader034.fdocuments.in/reader034/viewer/2022051423/5681697b550346895de18413/html5/thumbnails/36.jpg)