Pumper: 'Some Interesting Signs Ahead'

DALLAS—For the clearest read on the thinking of the major institutional players in commercial real estate, it pays to be around Steve Pumper. That's because the Dallas-based executive managing partner at Transwestern has the ear of these investors, and a facility for grouping several of them together to share their insights. He'll be doing just that on Thursday morning, as he moderates “Institutional Investor Insights: Where We Are Today and Where We're Going,” the lead-off panel for this year's RealShare National Investment & Finance conference. The two-day gathering at the Roosevelt Hotel in Midtown Manhattan begins Wednesday evening with a cocktail reception and then gets down to business the following morning with a day-long array of panel discussions.

“As I travel around the country, there's a common theme right now: people are showing a little more concern as to where we are in the cycle,” Pumper tells GlobeSt.com. In consideration of that question, “we're determining, as people re-evaluate placing their capital, what strategies they're utilizing.”

From Pumper's vantage point as head of Transwestern's capital markets and asset strategies group, “It appears to me that core strategies in coastal markets continue to be strong. Having said, I feel that we've leveled off on pricing. That doesn't mean we won't see some outliers setting new highs, but for the most part we've leveled off on peak pricing in many of the markets for core assets around the country.”

Another question at the moment is how investors seeking a little more yield are playing in the value-add arena. “Although the fundamentals are very strong in many markets, it seems that people are becoming a little more risk averse,” says Pumper. “Throughout this year in that particular space, we've seen the re-emergence of the bid-ask spread.”

Accordingly, Pumper will ask his panelists, “ 'if you are playing in that value-add space, how are you underwriting markets today? Where are you willing to stretch? What product types do you want to pursue, and what markets or submarkets? What fundamentals are you looking for to lead you to step up and place capital in that value-add space?' Because depending on which study you look at, we're down anywhere from 15% to 20% off of last year's pace.”

However, Pumper says, “I'm seeing some interesting signs ahead. In the first half of the year, there was a significant drop-off in portfolio and entity-level plays compared to 2015. Now, in the past 45 to 60 days, you've seen the re-emergence of that, with numerous portfolios being brought to market and numerous portfolio acquisitions being announced.”

It remains to be seen whether these deals are re-merging to stay. “So we're trying to determine whether that's just a dead cat bounce or we'll see that business start to pick up again as the people who are able to raise capital have been raising it in significant amounts,” in the $1-billion to $10-billion range, Pumper says. He adds that those whose sights are set a little lower, in the $100-million to $300-million range, are having a little more difficulty hitting those goals. “Given that, are the portfolio and entity-level plays coming back into vogue, and will we see more and more of that activity as people perceive us potentially getting later into the cycle?”

More than 300 of the industry's leading national investors, REITs, banks, private equity firms, asset management firms and other institutions will join us as we explore the market conditions behind the trends at this year's RealShare National Investment & Finance, scheduled for Oct. 5 and 6 at the Roosevelt Hotel in New York City. Learn more.

DALLAS—For the clearest read on the thinking of the major institutional players in commercial real estate, it pays to be around Steve Pumper. That's because the Dallas-based executive managing partner at Transwestern has the ear of these investors, and a facility for grouping several of them together to share their insights. He'll be doing just that on Thursday morning, as he moderates “Institutional Investor Insights: Where We Are Today and Where We're Going,” the lead-off panel for this year's RealShare National Investment & Finance conference. The two-day gathering at the Roosevelt Hotel in Midtown Manhattan begins Wednesday evening with a cocktail reception and then gets down to business the following morning with a day-long array of panel discussions.

“As I travel around the country, there's a common theme right now: people are showing a little more concern as to where we are in the cycle,” Pumper tells GlobeSt.com. In consideration of that question, “we're determining, as people re-evaluate placing their capital, what strategies they're utilizing.”

From Pumper's vantage point as head of Transwestern's capital markets and asset strategies group, “It appears to me that core strategies in coastal markets continue to be strong. Having said, I feel that we've leveled off on pricing. That doesn't mean we won't see some outliers setting new highs, but for the most part we've leveled off on peak pricing in many of the markets for core assets around the country.”

Another question at the moment is how investors seeking a little more yield are playing in the value-add arena. “Although the fundamentals are very strong in many markets, it seems that people are becoming a little more risk averse,” says Pumper. “Throughout this year in that particular space, we've seen the re-emergence of the bid-ask spread.”

Accordingly, Pumper will ask his panelists, “ 'if you are playing in that value-add space, how are you underwriting markets today? Where are you willing to stretch? What product types do you want to pursue, and what markets or submarkets? What fundamentals are you looking for to lead you to step up and place capital in that value-add space?' Because depending on which study you look at, we're down anywhere from 15% to 20% off of last year's pace.”

However, Pumper says, “I'm seeing some interesting signs ahead. In the first half of the year, there was a significant drop-off in portfolio and entity-level plays compared to 2015. Now, in the past 45 to 60 days, you've seen the re-emergence of that, with numerous portfolios being brought to market and numerous portfolio acquisitions being announced.”

It remains to be seen whether these deals are re-merging to stay. “So we're trying to determine whether that's just a dead cat bounce or we'll see that business start to pick up again as the people who are able to raise capital have been raising it in significant amounts,” in the $1-billion to $10-billion range, Pumper says. He adds that those whose sights are set a little lower, in the $100-million to $300-million range, are having a little more difficulty hitting those goals. “Given that, are the portfolio and entity-level plays coming back into vogue, and will we see more and more of that activity as people perceive us potentially getting later into the cycle?”

More than 300 of the industry's leading national investors, REITs, banks, private equity firms, asset management firms and other institutions will join us as we explore the market conditions behind the trends at this year's RealShare National Investment & Finance, scheduled for Oct. 5 and 6 at the Roosevelt Hotel in New York City. Learn more.