Current Comment

The economic climate

Contrary to the general media the commercial real estate industry point to fundamental differences between the recent market turbulance and that of the early 1990's in London. Here are some of the reasons:

  • Interest rates were 14%-15%.
  • The economy in the 1990's was plunging into recession.
  • There was significant building boom whilst todays is fuelled by well capitalised companies. 
  • The property market is now much more international
  • Rents are still rising albeit more slowly

Our client is known for acting with speed and agility with the ability to draw on significant expertise to execute transactions and has been taking advantage of the revaluing of certain assets in London and adding them to their portfolio. Their portfolio also extends to Europe including major properties in key locations with attractive yields. 

85% Of Pension Funds Choose Real Estate
March 2008 | Source: Hedge Fund Daily

Real estate is by far the most popular alternative investment among public pension plans in the U.S. and Canada. According to a survey by Bear Stearns’ Pension, Endowment and Foundations Services Group and the Government Finance Officers Association, 85% of respondents identified real estate as their favorite alternatives asset class, followed by private equity (60%), venture capital (44%) and hedge funds (42%). Overall the study found that 52% of the 150 public pension plans polled either invest or plan to invest in alts. The 48% that do not invest in alts explain that either they are barred by law or by investment policy from doing so or other reasons, such as the conservative nature of their board of trustees. In other findings:

  • 35% of plans invest directly in hedge funds, with the top three strategies being multi-strategy, long/short equity and market neutral.
  • 53% invest in funds of hedge funds.
  • 12% say they use 130/30 strategies, with 58% responding that they were considering it and 30% mixing them altogether.
  • 80% of the plans are advised by consultants for investment decisions, while 70% use consultants to perform due diligence on prospective managers.
  • 15% say they are not currently using any risk-management tools, while 5% replied that they have internal measures in place.