Surfing the Web • Chapter 20 ½ 2
Chapter 20: property development and market analysis
Surfing the Web
Read “The Deal Market: Hot as a Pistol” (http://www.cre.org/newsandmarketinfo/market_article.cfm?lid=710 ):
1. What are core investments?
2. What does TIAA-CREF’s investing in core real estate assets mean?
3. What themes are driving the opportunity funds market?
See next page for answers
Answers
1. What are core investments benefits?
Core investments offer little risk, low leverage, and return expectations on the low end of the scale.
2. What does TIAA-CREF’s investing in core real estate assets mean?
An asset in one of the major property types, going in with expectations for a 7 percent return and hopes of getting more like 9 percent to 10 percent returns, without heavy use of leverage.
3. What themes are driving the opportunity funds market?
Three themes are driving the opportunity fund market today: with the U.S. market fairly saturated, the funds are not finding much of their namesake opportunities available; more opportunities have emerged internationally, evidenced by the fact that Morgan Stanley raised $2.5 billion for overseas investments and just $500 million for U.S. investments last year; and funds, nearing the end of the deal cycle for a lot of their holdings, will become net sellers soon.
Larsen • Real Estate Principles and Practices