Proven private equity real estate investing strategies
The subprime fallout and credit crisis have triggered a major transition in U.S. real estate. With tightening lending and underwriting standards, speculative investments and construction projects are likely to limited, resulting in constrained supply and healthier fundamentals over the long term. Looking forward, market participants anticipate that the coming years will be fraught with challenges as well as opportunities.
Active Private Equity Real Estate Strategy is a collection of abridged market analyses, forecasts, and strategy papers from the ING Clarion Partners' Research & Investment Strategy (RIS) group. Divided into two comprehensive parts, this practical guide provides you with an informative overview of real estate markets, forecasts, and recent trends in part one, and presents specific active strategies in private equity real estate investing in part two.
Includes a simulation of the economy in recession and the expected effects on the commercial real estate industry
Offers examples of portfolio analysis and recommendations using ING Clarion's forecasts and Modern Portfolio Theory
Focuses on multifamily, hotel, land, and industrial investments
Demonstrates the use of the various tools available to the private equity real estate investor
Written with both the individual and institutional real estate investor in mind, this book offers specific private equity strategies for investing in real estate during volatile times.
DAVID J. LYNN, PHD, is Managing Director and Head of ING Clarion Partners' Research & Investment Strategy Group. He is also a member of the Investment Committee as well as the Operating Committee of ING Clarion Partners. Lynn is a Counselor of Real Estate (CRE), a Certified Portfolio and Investment Manager (CPIM), a Chartered Management Analyst (CMA), a Certified Planner (AICP), and a Homer Hoyt Fellow. Lynn earned his PhD in financial economics from the London School of Economics where he also earned a master of science degree specializing in finance. He also earned an MBA from the Sloan School of Business, Massachusetts Institute of Technology. TIM WANG, PHD, is Head of Macroeconomic Analysis and Strategy at ING Clarion. He has an MBA from New York University and a PhD from the University of Georgia. MATSON HOLBROOK is a former senior associate at ING Clarion. He holds an MS in real estate from New York University and a BS in cartography and geographic information systems (GIS) from the University of Wisconsin. BOHDY HEDGCOCK is an Associate at ING Clarion. He holds a master's in urban planning from the University of Colorado. JEFF ORGANISCIAK is a Senior Analyst at ING Clarion. He graduated from the University of Pennsylvania with a BA in economics and political science. ALISON SAUER is an Analyst at ING Clarion. She is a graduate of Tufts University where she earned a BS in mathematics. YUSHENG HAO is an Analyst at ING Clarion. He holds an MS in financial engineering from Baruch College, CUNY.
Preface ix Disclaimer xiii Acknowledgments xv About the Authors xvii PART ONE Market Analysis and Forecasts 1 CHAPTER 1 Overview of the U.S. Real Estate Market 3 Tim Wang and David Lynn CHAPTER 2 Forecasting the U.S. Market 19 David Lynn CHAPTER 3 Recession Simulation and Its Effects on Real Estate 25 Tim Wang, Alison Sauer, and David Lynn CHAPTER 4 Subprime Fallout: The Impact on Commercial Real Estate 41 Tim Wang and David Lynn CHAPTER 5 Capital Markets: Dramatic Shifts and Opportunities 47 David Lynn and Tim Wang CHAPTER 6 The Bid-Ask Problem and Game Theory 53 Jeff Organisciak, Tim Wang, and David Lynn PART TWO Active Strategies 67 CHAPTER 7 Residential Land Investment 69 Bohdy Hedgcock and David Lynn CHAPTER 8 The U.S. Hotel Market and Strategy 103 Tim Wang, Matson Holbrook, and David Lynn CHAPTER 9 Global Gateway Industrial Market Investment 125 Bohdy Hedgcock and David Lynn CHAPTER 10 The Opportunity in Senior Housing 159 Tim Wang and David Lynn CHAPTER 11 Active Portfolio Management Using Modern Portfolio Theory 187 David Lynn and Yusheng Hao CHAPTER 12 Derivatives in Private Equity Real Estate 217 Jeff Organisciak, Tim Wang, and David Lynn CHAPTER 13 Opportunities in Infrastructure Investment 239 David Lynn and Matson Holbrook APPENDIX A Typical Land Development Pro Forma Analysis Three Scenarios 247 APPENDIX B U.S. Hotel Chain Scales 253 APPENDIX C Modern Portfolio Theory in Real Estate Portfolio Analytics 257 APPENDIX D Commercial Real Estate Indexes 259 APPENDIX E Example NPI Forecast Methodology 263 Selected Bibliography 265 Index 267