Preparing to Approach the Institutional Market

IRVINE, CA—As GlobeSt.com reported last week, as part of an ongoing strategy to further grow its base of institutional investors, Western National Group has launched an enhanced institutional investor-focused platform and appointed George Ochs, a former institutional manager with JP Morgan, as its chief marketing officer. Ochs will work to expand Western National's investor base by overseeing the firm's strategic outreach to corporate and public pension funds, endowments, foundations and high-net-worth individuals and will also be responsible for maintaining and developing relationships with WNG's current investor groups. We caught up with Ochs to discuss his new position and the institutional-investor mindset today.

GlobeSt.com: What is most important to you about your new position?

Ochs: Western National Group has a long and successful history. What they need to do is to widen their capital base by approaching the institutional market. Given that they are vertically integrated, meaning that they do everything around multifamily here in California, the next logical step is to expand their platform by tapping into larger sources of capital, and the logical place for that is the institutional marketplace. It's exciting. I'm very familiar with the firm and have worked with them for many years, so I'm proud to lend a helping hand to WNG going forward.

GlobeSt.com: Why was now the right time to launch this enhanced institutional-investor-focused platform?

Ochs: There are two parts to that. Number one has to do with WNG itself. Given its history, it is well-prepared to move into the institutional-investor market. Number two is that the choice for people under 35 is to rent vs. own. What we've seen now for a number of years since the recession is that the percentage of renters as opposed to homeowners is on the rise, and we all know the reasons why. Yet, on top of the financial reasons, this younger generation is made up of renters by choice. They are less inclined to own a home and cut the grass and do all the maintenance. They are more mobile and would prefer to have a much more flexible housing arrangement by being a renter. Also, the quality of rental product has increased—it's not just a place to rest in the evening. We offer designs intended to allow the renter to minimize responsibility and maximize the way they want to spend their time. That's a trend we are riding, and I don't see that changing any time soon.

GlobeSt.com: What are institutional investors' greatest concerns today? Is it all about yield?

Ochs: What you're seeing more broadly for institutional investors is that five to six years out of the recession, they have enjoyed tremendous returns principally from the stock market. Bonds have not been so hot, and real estate in particular has come back, but it's not at a point where there's an obvious bubble or pricing problem. What they're looking for is a way to reallocate some of their gains and equities into some areas that are less volatile, where they can preserve and keep those gains, and one of those areas is real estate. It's tangible, but it holds value over time and produces income return, which is important for institutional investors.

GlobeSt.com: What new trends do you see emerging regarding institutional investors?

Ochs: In recent years, we've seen a long-term shift in asset allocation away from bonds and more-volatile investment in the equities and toward alternative investments, which includes real estate, hedge funds and private equity. This bodes well for us in the real estate environment because it's a younger asset class than equities and has risen, and we're expecting a lot more of that over the next 10-plus years. WNG is really a tremendous opportunity for those in the institutional world looking to invest in high-quality multifamily properties, and we hope to connect to those folks going forward.