Active Private Equity Real Estate Strategy (eBook)

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

"David Lynn's collection of articles on real estate
markets are applied research at its best. The analysis is thorough,
concise, and to-the-point. The book leaves you with a richer
understanding of real estate market dynamics. It is a must-read for
serious real estate analysts." --Peter Linneman,
Principal, Linneman Associates (www.linnemanassociates.com), and
Albert Sussman Professor of Real Estate, Finance, and Public Policy
at the Wharton School of Business (www.wharton.upenn.edu)

"This is a fascinating look between the ears of one of the
largest global real estate investment management organizations,
providing a timely and incredibly comprehensive view of how these
institutions fashion investment strategy. A must-read for both
students and practitioners attempting to understand the nature of
today's commercial real estate investment markets and how
large institutions like ING approach those markets for the benefit
of their institutional investor clients." --Geoffrey
Dohrmann, President and CEO, Institutional Real Estate, Inc.

"David Lynn provides an analytical road map for private
equity real estate investors, charting strategies in the next
market cycle. Lynn's methodology shows why he is recognized
as one of the top forecasters in the industry. He covers all the
markets and property sectors with a treasure trove of data to make
sense of future trends. This book offers a big picture view with
the detailed perspective investors crave." --Jonathan D.
Miller, Partner, Miller Ryan LLC, and author of Emerging Trends in
Real Estate and the blog TrendCzar(TM) (in conjunction with
GlobeSt.com)