27 october 2006
DESCRIPTION
Challenges of Investing in Real Estate Today… And the Advantages of Co-Investing with Specialist Operators. 27 October 2006. MCP OVERVIEW. Chicago 1 Banking/Placement. London Banking/Placement. Sydney 2 Placement. New York Placement. - PowerPoint PPT PresentationTRANSCRIPT
27 October 2006
Challenges of Investing in Real Estate Today…
And the Advantages of Co-Investing with Specialist Operators
2
MCPL2058-a-180406
Founded in 1991 as capital markets affiliate of Security Capital Group (“spun out” in 2001)
Boutique real estate investment bank – focus on private equity and M&A advisory
Global distribution
60 employees
200+ real estate operator relationships
450+ real estate investor relationships
$40.9 billion in 171 transactions since 19913
MCP OVERVIEW
1 MCP headquarters.2 Placement capabilities in Asia / Australia through Macquarie Bank.3 As of October 1, 2006.
LondonBanking/Placement
New YorkPlacement
Chicago 1
Banking/PlacementSydney 2
Placement
3
MCPL2058-a-180406
0
100
200
300
400
500
600
700
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Asia Europe North America Middle East Australia
(in millions)
Sources: U.S. Census Bureau International Data Base, Little Green Data Book 2004, OECD, MCP, Goldman Sachs: Report on Alternative Investing.1 Represents household and non-profit institution saving rates as a percentage of disposable household income (5-year average from 1999-2003).2 Represents the simple average of Norway, Sweden, Denmark and Finland.
Retirement Age Population (65+ years of age)
Savings / RE Investment
Actual Forecast
DEMOGRAPHIC SHIFT TO YIELD
4
MCPL2058-a-180406
INCREASED TRANSACTION VOLUME
€216
€148
€61
€83€95 €96
€156
€89€85€77
€0
€50
€100
€150
€200
€250
€300
2001 2002 2003 2004 2005
US Volume Europe Volume
Note: US transaction volume converted into Euro with exchange rate as of August 13, 2006, $1 = €0.7977Sources: Real Capital Analytics, Jones Lang LaSalle. Reflects total volume of direct property transactions in the four core sectors.
(€ billions)
Direct investment in U.S. real estate was 3.5x higher in 2005 versus 2001
5-Year CAGR = 37%
5-Year CAGR = 19%
Direct investment in European real estate was 2.0x higher in 2005 versus 2001
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MCPL2058-a-180406
CHALLENGES FOR REAL ESTATE INVESTORS
Investor Issues
Limited access to product
Inefficient staffing model
Outperformance is increasingly difficult
Alignment of interest
Benefits of Partnering with Specialist
Operators
Efficient use of staff
Take advantage of local market expertise
Team up with specialists
Co-investment enhances alignment of
interests
Difficult to obtain local market expertise
Gain access to extensive transaction pipelines
6
MCPL2058-a-180406
Partner
(2 offerings)
(3 offerings)
(6 offerings)
(2 offerings)
(2 offerings)
Total
Real Estate Sector Multifamily Industrial Senior Housing Self Storage Condo
Year 2000 2001 2002/3/5 2003/4 2004/5
Number of Properties 11 80 74 2 74 3
Asset Locations U.S.
(8 markets)
U.S.
(27 markets)
U.S. & U.K.
(22 markets)
Europe
(6 markets)
U.S.
(1 market)
Investor Equity ($ M) $681 $1401 $362 $194 $36 $800
Total Capitalization ($ M) $239 $593 $1,481 $577 $182 $3,072
(U.S. $ in millions)
INVESTOR CASE STUDY – INTERNATIONAL INVESTOR
1 Investor has realized a capital event on this investment. 2 Includes 3 development assets.
Investor has deployed approximately $800 M of equity in the U.S. and Europe through five operating partner relationships
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MCPL2058-a-180406
ConclusionsInvest with specialist operators
Real estate is a good diversifier
Invest in partnership with specialist operators with a strong track record in a given sector
Invest in well established JV / fund structures advised by internationally recognised legal and tax advisors
Focus on best market practice in corporate governance, reporting / transparency and fees
Check what leading (and more experienced) institutional investors are doing