This week @NAREIM hosted more than 130 members in NYC - for two distinct meetings. You heard that right, two totally different meetings held at the exact same time. Huge shout out to our members for developing and leading discussions for our Asset Management meeting and Portfolio Management meeting. It was amazing to be a part of these discussions and we couldn't have done this without their leadership. So a huge shout out to our Asset Management Committee, led by: Haley Donato (Gallagher); Jason J. Acosta; Sara Owen; Anil Erdem; Joseph Mancuso; Rick Bierbower; Leyla Leblebici; Erick J. Bracero Serrano; Mike Daniszewski; Eric Lind; Michael Henry and Jake Sneed. And to IvyLee Rosario for her work with the Committee. And to our Portfolio Management Committee, led by: Kate Bassett; Scott Dunphy; Kate Davis; Larissa V. Belova; Susan Kolasa, CFA; Jason Dean; Drew Stepanek; Lucas Kimmel; Jake Lewis, CFA; Chris Barbier. And to Alexandria Gonzalez, Nylz Reyes, Neeva Shrestha, MSRE, William Harris and Rebecca Glasgow for all their hard work.
“We are close to the end.” Yes, NAREIM’s Portfolio Management and Asset Management meetings in NYC this week may have marked the last of NAREIM's in-person meetings for H1 2024 - but it's not that end we're talking about. Instead, portfolio managers feel US CRE values are stabilizing, or set to end their qtr over qtr declines. The end of the current downturn is close, they believe. With almost 70 portfolio managers gathered in midtown Manhattan this week, we discussed valuations, the dispersion of returns during the 2023/24 downturn, debt distress and emerging opportunities as well as underwriting sustainability, AI and value creation through the next cycle. Key highlights included: * Almost half of portfolio managers agreed that value declines would stabilize within the next quarter. A further 25% expected the downturn to end within the next 12 months. * “You are going to see a lot of “Come to Jesus” moments this year and next; but as you look ahead understand that you will “no longer have the capital markets at your back anymore. It’s about focusing on the fundamentals and asset management – managing the cap-ex and getting the op-ex right.” * Already, some sections of the market are back, not least among debt platforms where one deal for a mark-to-mark industrial loan saw 14 debt funds bid versus two to three in 2023. * Despite the lack of appetite among institutional investors for office, the member said: “Office is an opportunity. But investor sentiment is not there yet. It provides coverage for our capital and is compelling at a reset basis.” * Almost two-thirds of real estate investment managers using GenAI today are doing so for internal communications – with almost half using artificial intelligence tools for RFPs and DDQs. * Sustainability measures and even Building Performance Standards could be seen as having upside for the portfolio or deal - with BPS creating higher operational costs and increasing barriers to entry for a market. * Solar can generate six-figure incomes that go straight to NOI. Just remember: You need an in-house or third-party structural and legal review of the roof. Do not rely on the solar developer’s analysis. Huge shout out to the NAREIM Portfolio Management Committee for all their hard work developing the agenda. To our co-chairs Kate Bassett and Scott Dunphy as well as Larissa V. Belova, Jake Lewis, CFA, Kate Davis, Susan Kolasa, CFA, Lucas Kimmel, Jason Dean, Drew Stepanek, Chris Barbier. And to IvyLee Rosario for leading the NAREIM Asset Management meeting; Alexandria Gonzalez, Nylz Reyes, Neeva Shrestha, MSRE, William Harris and Rebecca Glasgow for all their hard work.
