FORUM: Institutional Players Must Adjust Strategies , Says Boneham

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Paul Boneham predicts 60% of
Bentall's funds will go for
core assets.

“A great deal of our strategic comparing of opportunities is based on the basis and what a 10-year unleveraged IRR looks like, because when you start throwing the financing in, that’s just financial engineering. It really distorts the picture,” shared Paul Boneham of Bentall Kennedy. “You might use the debt later, but it’s not the primary basis for making the decision.”

Boneham was just one of the participants in the annual Transwestern/Real Estate Forum Capital Markets Symposium, which gathered together decision-makers from some of the nation’s top institutions for a frank discussion on the state of affairs today. The conversation revolved around determining how, when and where to place capital in the midst of an unreliable global economy and credit market upheaval, as well as expectations for the near and long term.

“In 2012, I would expect that 60% of our capital would be deployed into core assets, from which we expect to produce 7.5% to 8% unleveraged IRR on a 10-year hold,” Boneham shared. The balance “would go to value-add.”

With more than $164 billion in collective real estate assets under management, the speakers certainly have their work cut out for them. But they all agree that in a market that’s redefining itself, finding opportunities means readjusting your strategy.

In addition to Bentall Kennedy’s Boneham, senior-level executives who shared their views include Gerald Casimir, TIAA-CREF; Charles B. Leitner, RREEF; Todd T. Liker, Oaktree Capital Management; Robert J. Plumb, AEW Capital Management LP; and Brian Watkins, Clarion Partners. Michael G. Desiato, ALM’s Real Estate Media group, and Transwestern’s Steven Pumper moderated the session.

For more on what the panelists had to say, go to Forum’s January 2012 cover story, “New Era of Recalibration.”

Categories: International, Acquisitions/Dispositions, Capital Markets, Development, Distressed Asset Investments, National