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THOUGHT LEADER
Acquisition Strategy
THOUGHT LEADER
ANTHONY LoPINTO
Senior Client Partner,
Global Sector Real Estate
Korn/Ferry International
What’s your take on how 2012
will shape up?
I am feeling relatively good about 2012,
and here are my prognostications for
the year ahead: With Iowa behind us,
election year kicks into high gear, and
we will be barraged by the Left and the
Right, but not a peep from the center. I
harbor the hope that this election will
ultimately find an effective center, where
our government operates at its best. The
euro crisis will fade into the background
as the EU makes hard decisions and
establishes a way forward. Employment
will show respectable gains, still not anywhere near pre-recession levels. The
Dow will crack 13,000. I sense that the
“Bear” is heading back into hibernation,
and equity markets will begin a steady,
long run. Alas, real estate will lag the
recovery, but this is not unusual. The
stage is being set for a slow and steady
rebound that will gather steam later this
year, and hiring activity will follow suit. I
am confident that 2012 will be a good
year, and one that heralds a calming of
the choppy waters.
To read LoPinto’s weekly column on GlobeSt.
com, go to globest.com/executive watch
HESSAM NADJI
Managing Director, Real Estate
and Advisory Services
Marcus & Millichap
Real Estate Investment Services
What will be the challenges for
investors this year?
In 2012, the challenge will be to balance the “wait and see” approach and
the traditional need for more clarity
with the established fact that by the
time the macro economic risks are truly
reduced, property pricing will have
already moved. Therefore, this is the
time for assertive market selection, asset
selection, a well-thought out value creation and exit strategy—all built on an
astute leveraging of incredibly low interest rates. The top-flight, low-risk acquisition strategy of 2010-2011 will not pencil out as easily in 2012 thanks to
recompressed capitalization rates and
back-to-peak pricing for many top-tier
commercial real estate properties. One
clear trend is the favorable position of
commercial real estate as an asset class
by multiple measures, starting from
going-in yields to improving fundamentals, lack of new supply (across most
product types), increased financial
lending sources and, of course, low
interest rates.
Read Hessam Nadji’s blog, “StreetSmart,” at
globest.com/blogs/streetsmart
DAN PRYOR
Partner
Odessa Realty Investments
How could 2011 has been
better for the economy?
Perhaps the biggest economic disappointment of 2011 was the failure of the
Super Committee to address the root
causes of the federal deficit crisis. Maybe
more frustrating is the failure of leadership we’ve witnessed in the corporate
suites of the global financial world.
Despite being managed by the brightest
minds in Europe, the major banks on the
continent are approaching insolvency
due to an unfortunate gorging of
European sovereign debt. Think of
Lehman Brothers’ real estate group
destroying that great firm and good ol’
Jon Corzine allegedly misappropriating
$1.2 billion of his clients’ funds. Perhaps
it’s just the group-think thing that leads
to unsound investment decisions. The
current group-think in commercial real
estate is that buying assets in select gateway cities at five-caps is a compelling
investment. Maybe the Wall Street investment herd is correct, or perhaps we’ll see
huge write-downs of these acquisitions if
(or when) cap rates revert to the mean.
Read Dan Pryor’s blog at: globest.com/blogs/
commercialpropertyadvisor
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