Advice to Investors: Be a Sharpshooter

LAGUNA BEACH, CA-Panelists at Information Management Network's Forum for Opportunity and Real Estate Investing here yesterday were all about advocating being a “sharpshooter.” That is, investors should take their time and underwrite deals that make sense for their portfolio, especially in a market where there is pent-up demand to deploy capital.

Brian Crane, a principal at Artemis Real Estate Partners, said his firm focuses on investing in core-plus product across geographies and product types, looking at smaller funds and smaller deals. “Being a sharpshooter allows us to take advantage of the operational lease-up upside in core-plus funds, and we've been successful at this strategy.”

With the changing economy, investor strategies are shifting. When David Kessler, co-managing partner at CohnReznick LLP, asked panelists where to invest for yield now that there will be backing off of buying bonds, Drew Fung, managing director of Clarion Partners, said, “A lot of primarily core investors are shifting their focus from equity to debt. There's a little more downside protection.”

Despite the threat of rising interest rates, inflation is not a significant concern, added David Lynn, EVP and chief investment strategist for Cole Real Estate Investments. “The reaction in spring to rates changing was an overreaction. I don't see it being a '70s runaway inflationary environment. It's still an income-oriented investment environment and it will be for the long term.”

John Murray, EVP of Pimco, added that job growth is allowing young adults who were living with their parents to move out and rent apartments, which bodes well for the multifamily market, and he advocates core over value-add for yield in that sector.

The need to create value in one's assets is high, Crane said. “You can't count on appreciation.” He added that he doesn't see a massive overleverage in this cycle. “We're underwriting very carefully. I don't see storm clouds, but I see building clouds. The linear thinkers may have more problems [during this cycle.]”