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Devon W. Olson, CRE, MAI Director – Real Estate Utah Retirement Systems.

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Presentation on theme: "Devon W. Olson, CRE, MAI Director – Real Estate Utah Retirement Systems."— Presentation transcript:

1 Devon W. Olson, CRE, MAI Director – Real Estate Utah Retirement Systems

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3  Overbuilding  Resolution Trust Corporation -1989  Real Estate Fundamentals Secondary to Tax Incentives  Financial Institutions Commercial Lending was Suspect

4  Monitor overbuilding  Use Real Estate forecasting tools such as Torto Wheaton, REIS and Proprietary Research  Diversification by Property Type and Geographically  REITs for diversification and liquidity

5  Real Estate was not immune to the Credit Crisis  Real Estate Fundamentals couldn’t withstand the impact of the falling market  Leverage became Negative  Credit availability was significantly reduced as the CMBS market collapsed

6  NCREIF Income vs. Appreciation Typically Income > Appreciation  Cap Rates vs. 3 month Treasuries Narrow Spreads indicate Real Estate overpriced  Cap Rates vs. Ten Year Treasuries Increased Real Estate Demand and Prices  Ten Year Treasury vs. 6 month Treasuries Inverted Yield Curve and narrow spreads are recessionary indicators

7  NCREIF Total Return vs. NAREIT Total Return NAREIT is a forward indicator for Private Real Estate  NAREIT Dividend vs. 10 Year Treasury Tighter Spreads indicate Public Real Estate Overpricing  3 month Treasury vs. 3 month Libor TED Spread – Tighter spread indicates banks are eager to lend  Baa Bond vs. 10 year Treasury Tighter Spreads indicate easy money for Higher Risk Bonds

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9  Fighting the Last War – Prepare for the next war  Real Estate Fundamentals Research  Real Estate Economic Indicators  PREA Ltd Partnership Model Provisions  Better Evaluate Investment Risk Core Value Add Opportunistic


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