Winter 2010 Institutional Investor Survey:

Please take a few moments to complete this survey by December 18, 2009.

UNLEVERAGED FREE AND CLEAR RETURNS

Title/Position:
Institution/Company:
Email:
Firm Type:
Investment Strategy (please check)

core       core-plus       opportunistic       foreign       value add

 


Is there anyone else in your firm or in another organization you can also recommend to fill out this survey? If so, please provide a name and contact information:

Thank You.
 
 

INVESTMENT CRITERIA (Please not: Expectations are for unleveraged properties.)

1.  Yield rates (IRR):  What are your current unleveraged yield expectations by property type?
2.  Capitalization rates:  What are your expectations for free and clear going-in and terminal capitalization rates?
3.  Income Methodology: Relates to the direct capitalization method and the discounted cash flow (DCF) method.
4.  Direct Capitalization: When is the cap rate applied, before or after reserves?
First Tier Properties
(New or newer quality construction in prime or good locations)

IRR

Going-in

Terminal
CBD Office
Suburban Office
Industrial - Warehouse
Industrial - R&D
Industrial - Flex
Retail - Regional Mall
Retail - Power Center
Retail - Neigh/Comm.
Apartments
Hotels

What is the most relevant?

(Rank 1 to 10, 10 being most relevant)

Direct Capitalization

 DCF  
CBD Office
Suburban Office
Industrial - Warehouse
Industrial - R&D
Industrial - Flex
Retail - Regional Mall
Retail - Power Center
Retail - Neigh/Comm.
Apartments
Hotels

 
Cap rate applied to what level of NOI?

Before reserves

After reserves

                (check one)
CBD Office
Suburban Office
Industrial  - Warehouse
Industrial - R&D
Industrial - Flex
Retail - Regional Mall
Retail Power Center
Retail - Neigh/Comm.
Apartments
Hotels
IRR is the rate of interest that discounts the pre-income tax cash flows received by the equity investor(s) back to a present value
that is exactly equal to the amount of the original equity investment.  (In effect it is a time-weighted average return on equity, and as 
used here, is synonymous with the term "yield.")
Going-in cap rate is the first year NOI (before capital items of tenant improvements, leasing commissions and debt service,
but after real estate taxes) divided by present value (or purchase price).
Terminal cap rate is the rate used to estimate resale or reversion value at the end of the holding period.  Typically, it is the NOI
in the year following the last year of the holding period that is capped.  
First Tier Properties-New or newer quality construction in prime or good locations, with very strong tenancy.
Note:  IRR responses are assumed to be for unleveraged all-equity transactions
INVESTMENT CRITERIA
1.  Growth rates:  What are your current underwriting assumptions regarding growth rates?  Please respond "0" if you anticipate 
     no growth.
2.  Leasing Assumptions:  When modeling tenants for purposes of DCF analysis, what rollover/tenant turnover probabilities 
    (i.e., the probability a tenant will renew/vacate at the end of their lease) would you typically use for each of the major land uses?
    Please indicate your assumptions for vacancy loss and down times for releasing space. 
3. Marketing Time: What is the average marketing time for all properties of the indicated type in all markets? Although each market is different, please provide an estimate in months for these property types.
                    Growth Rates                    

Market

Holding

Rent

Expense

Inflation

Period
% % % (years)
CBD Office

Suburban Office
Industrial - Warehouse
Industrial - R&D
Industrial - Flex
Retail - Regional Mall
Retail - Power Center
Retail - Neigh/Comm.
Apartments
Hotels
           Leasing Assumptions         Marketing

Renewal

Vacancy

Time*

Probability

Loss

Down-time

Avg.
% % (months) (months)
CBD Office
Suburban Office
Industrial - Warehouse
Industrial - R&D
Industrial - Flex
Retail - Regional Mall
Retail - Power Center
Retail - Neigh/Comm.
Apartments
Hotels

NA

NA NA
General Investment Questions

 

 

 

 

1. Availability of capital: How would you rate the current availability and discipline of capital?
(1 = poor; 10 = excellent)

AVAILABILITY

DISCIPLINE

COMMENTS

2.  Investment recommendation:  Generally, in a mixed-asset context, will the coming quarter be a good time to buy, sell, or hold real estate?
(1 = worst time; 10 = best time)
 

BUY

SELL

HOLD

3.  Property types:  Please rate the appropriate recommendation for each property type for the upcoming quarter.
a. Buy-Sell-Hold:  Please CHECK the appropriate recommendation for each property type.
b. Risk of Overbuilding:  Please rate the levels of oversupply risk and new construction risk
 
BUY SELL HOLD
CBD Office
Suburban Office
Industrial - Warehouse
Industrial - R&D
Industrial - Flex
Retail - Regional Malls
Retail - Power Center
Retail - Neigh/Comm.
Apartments
Hotels
4.  Property types:  How would you rate the current investment conditions by property type?
    (1 = poor; 10 = excellent)
CBD Office
Suburban Office
Industrial - Warehouse
Industrial - R&D
Industrial - Flex
Regional Mall
Power Center
Retail - Neigh/Comm.
Apartments
Hotels
 
5. Outlook: Please rate the upcoming quarter's outlook for the following investment alternatives (1 = poor to 10 = excellent)
     
Stocks
 

Bonds
Commercial Real Estate
Cash
 
6. Economy: On a scale of 1 to 10 (1 = very weak, 10 = very strong), how do you expect the economy to perform over the next 4 quarters?
 
 
7. When will the economy start to see sustainable growth? (Please Check One)
     
0 - 3 months

3 - 6 months
9 - 12 months

More
Why?      
8. What are the biggest risks to the economy? (Rate each 1-10; with 1 reflecting a low risk and 10 a high risk)
     
Inflation
Interest Rates
Credit Availability
Oil Prices

Job Growth
Fiscal Policy
The Deficit
Other
9. Return vs. Risk: Please rate the relationship between return and risk (1 to 10 based on the graph below)
     
Office

Industrial
Retail
Apartment
Hotel
 
Overall
 
     

10. Value vs. Price: Please rate the relationship between price and value(1 to 10 based on the graph below)
     
Office

Industrial
Retail
Apartment
Hotel
 
Overall
 
     

 

11. Investment Opportunities
What property type is the best investment opportunity for the next 4 quarters? Why?
What property type should be avoided in the coming 4 quarters? Why?
 
12. Commercial Real Estate
When will commercial real estate prices stabilize?
Please state month and year.
 
How much will commercial real estate price and value adjust for the next 4 quarters?
     
Prices:    
Increase

Decrease

By what percent?
   
Values:  
Increase

Decrease

By what percent?
   
Sequentially rank from 1 to 5, with 1 being best, according to where the best relative prospects can be found over the next 4 quarters.
     

Office
Industrial
Retail
Apartment
 
Hotel
 
 
   
What direction are cap rates headed over the next quarter?
   
Increase

Decrease

By how many basis points?
 
What direction are cap rates headed by 4th Quarter 2010?
   
Increase

Decrease

By how many basis points?
   
 
Comments
 
Would you be willing to fill out other topical issue surveys from time to time?
Yes No
or be interviewed by telephone?
Yes No