On the Road with Marinus Dijkman (REP)

On the Road with Marinus Dijkman (REP) Monday 5 July 2010
AFIRE 2010 European Conference, Grand Hyatt Hotel, Berlin, Germany This is where US and European Investors meet. AFIRE is the Association of Foreign Investors in Real Estate. Their conferences are one of my highlights of the year. For a long time, stabled in Amsterdam and Frankfurt; since two years travelling Europe; from London (2009) and now (2010) to Berlin. A good choice. The conference was attended by more than 150 professional investors from Europe and the US. The theme ‘Handing off the Baton’ was referring to the race to recovery, the “baton” of capital creation and economic growth must eventually be passed from public sector stimulus programs to private sector spending and investment. Will this hand-off occur in 2010? By Marinus Dijkman, Editor in Chief, Real Estate Publishers (REP)
Panelists Roger Orf, President and CEO of Citi Property Investors; Steven A. Kohn, President and Principal Cushman & Wakefield Sonnenblick Goldman; Greg S. Vorwaller, COO, CBRE Capital Markets A great line of speakers passed in nearly six hours in the Grand Hyatt Hotel, Berlin. Raymond Torto (Global Chief Economist CB Richard Ellis) and Jacques N. Gordon (International Director, Investment Strategy and Research LaSalle Investment Management) opened the day with a session on The Economy. “Fundamentally Speaking” was the title of Mark Roberts (Global Head of Real Estate Invesco Real Estate) presentation on the global economy. Talking on cautious optimism over the US economy and questioning “is there really a reason to be optimistic?” A bright overview and lots of inside information but not a straight answer to this essential question. But be honest, if someone really good give that answer; it should not be wise to tell it here. “The Sword of Damocles” was hanging above the panel lead by Bart R. Steinfeld (International Director Jones Lang LaSalle) looking at the amount of debt and looms in on the Real Estate Market. The big question was: “will it end with a bang or with a whimper?” Panellists in this session were Claus-Jurgen Cohausz (Member of the Managing Board of Westdeutsche ImmobilienBank), Christoph Donner (Chief Credit Officer & Member of the Board Aareal Capital Corporation) and Anni Honicke (Global Head of Real Estate Lending DekaBank). Professor Dr. Hans Stimmann held a very interesting speech over lunch on “The Rebuilding of Berlin”. “Where are the motivated sellers?” was the question for the motivated investors who are complaining on the lack of good investment opportunities in the US. Moderator Christoph A. Kahl (Managing Partner Jamestown US-Immobilien GmbH) steered this question skilfully, his panel formed by: Stephen A. Kohn (President and Principal Cushman & Wakefield Sonnenblick Goldman, LLC), Roger Orf (President and Chief Executive Officer Citi Property Investors) and Greg S. Vorwaller (Chief Operating Officer, Capital Markets CBRE Capital Markets).
Panelists Roger Quirijns, Vice President, Cohen & Steers; Patrick Kanters, Mangaing Director, Global Real Estate, APG Asset Management US; Albert P. Behler, President and CEO of Paramount Group “Are listed Companies Holding the Baton?” was the closing session lead by Ian D. Hawksworth (Chief Executive, Capital & Countries Properties PLC) with as panellist Albert P. Behler (President and Chief Executive Officer Paramount Group, Inc.), Patrick Kanters (Managing Director, Global Real Estate APG Asset Management US Inc.) and Rogier Quirijns (Vice President Cohen & Steers). Some takeaways: • On a macro level, GDP growth seems to be returning to America. • Corporate US is beginning to show profitability again. • The yield spread on US real Estate seems to be behaving as it was intended to be. • It seems to be a continuation of this Zirth policy, – a zero interest rate policy – which seems to be helping everybody. • There is a huge wave of debt that needs to be refinanced, but debt seems to be coming back into the market. • There will be real occupational characteristics across all sectors and also with consumer demand. • It seems the forecast that there is a general consensus that there will be growth for the next five years. Between 5% and 10% in real estate but pension fund associations, talking about 7% or 8%. • The US seems to have weathered the storm; some funds have raised significant amounts of capital and debt over the past 12 months. • Share prices have grown, quite significantly across the world, particularly in the US and the UK from their weak points just over a year ago. • Debt is not just available on a corporate level but seems to be available for better quality assets, and those that are sometimes held by the public companies. • Will public companies be competitive? Are they going to be agile enough to take advantage of these properties that are coming into the market, or will they be constrained by sectorial or geographic focus that they have? • It’s a good time to invest in the US. • NCREIF (National Council of Real Estate Investment Fiduciaries) really believes that public REITS are the best place to make money for investors…for the last 20 years 10 % for annual growth against private equity at 8%.