Five Takeaways from the RealInsight 5th Annual Real Estate Private Equity Summit
December 4, 2017 | Mary Diduch | National Real Estate Investor
As 2017 comes to a close, RealInsight, a cloud-based commercial real estate and loan platform, hosted a summit to touch on major issues in real estate private equity. Topics included the disruption in the retail real estate sector, fears surrounding the current long economic expansion and when—or if—it might end and top markets and asset classes to look to for the future. Here are five takeaways from the event, held Dec. 1 in New York City.
- Investors are fearful. Investor fear is at an all-time high, said Robert Morse, chairman of the Bridge Investment Group, a real estate investment and property management firm, who gave the summit’s keynote address, referencing a Credit Suisse report as evidence. This expansion cycle has been very long, and investors are concerned about a downturn heading into 2018, he noted. Still, there appear to be strong macroeconomic fundamentals to support continued growth, including declining unemployment and continued corporate growth, for example. Morse also added that geopolitical events could have an impact on the real estate industry, but so far they haven’t. “I think the market vulnerability to geopolitical events, at least today, is relatively low. That can change through different behavioral economic impacts, but right now, that’s pretty benign,” he noted.
- Alternative investment strategies may be helpful, but it depends. There appears to be increasing interest in alternative property types, such as student and seniors housing and storage facilities. Marc Davidson, managing director at real estate investment firm AEW, said that his firm has been active in seniors housing since 1996, for example, and remains bullish on the sector. But some alternative strategies may be hard to execute. In the medical office sector, for example, it can be hard to build scale and property portfolios can be inefficient to manage, Davidson said. “It’s a small industry and it’s hard to accumulate critical mass in any one area,” he noted. Alisa Mall, director of investments at the Carnegie Corporation of New York, said the corporation has found success in manufactured housing, particularly in age-restricted communities, as well as in gas station and convenience stores, which appear Amazon-proof. However, with only a $3.5 billion endowment, the corporation can take on such smaller, niche strategies, she says. For bigger institutions, this may be harder to do as smaller assets are more difficult to aggregate, though large student housing portfolios may be an exception, she noted.
