Tuesday, October 5, 2010

Capital Allocation Wheels Starting To Move?

The PREA (Pension Real Estate Association) national meetings are this week in San Francisco. It is a fascinating meeting to attend, but I have been tied up with more pressing appointments this week. Hopefully next year.

However, a colleague in the industry, Tony LoPinto, attended and had a very telling observation, which was published at Globe Street yesterday.

He wrote the following: "There is a significant turnout, with a strong contingent of plan sponsors. There are always plenty of investment managers, advisers and 'service providers,' but the likes of the pension funds, endowments and other institutional investors have not been out and about at these conferences. Their presence implies that we are at the front end of the next cycle as capital begins to recognize that it needs to get invested, albeit, there is still some concern about where this market is going. However, of greater interest are which managers will get the nod for the next round of allocations. Will the plans dole out second chances or look to platforms that have retooled and positioned a new team on the bench, or an emerging manager. In my experience, memories are short and once we get through the first stage of renewed investment activity, all the old names will be back in the game with plenty of capital. It happens with every cycle."

These observations need to be processed and considered. LoPinto knows of what he speaks. He is a senior client partner and head of Korn/Ferry International's Real Estate Practice. There is no question the many facets of commercial/investment real estate have short memories. It usually just comes down to opportunity and anticipate returns.

The best news, however, is that capital is looking for a home. And that institutional investors are sniffing around for opportunities. If its happening in the pension world, it is happening elsewhere, too.

No comments: