did you believe us over the last five years what we think for 2015 & 2016 january 20, 2015...
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Did You Believe Us Over The Last Five YearsWhat we think for 2015 & 2016
January 20, 2015
Dennis P. YeskeyManaging Partner/[email protected]
“Keeping Clients & Investors Ahead of the Market”
Y
Outline
• Summary 2015
• Predictions - 2014, 2015 & 2016
• Product Life Cycle
• Top Five Issues – 2015 & 2016
• Some Interesting Misc. Exhibits
www.yeskeyrealestate.com
Predictions 2014
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Source: Yeskey Real Estate
Topic 2014 Prediction 2014 Actual 2014 Grades
GDP +2.5-2.7% 2.5% + A+
Interest Rates Flat, slightly up Flat, slightly down B
Stock MarketsModest rise; 8-10%; USA
Remains the place to invest 8-13%, USA #1 A
REITs Up Year – Double digits Up > 30% A+
Cap-X – Business Investment USA, Needs to be up! USA; Mixed B-
Dollar Dribbling Down Flat, slightly up at YE B
CRE Great year so far in 2014 Great year A+
Residential
Watch out – Res boom is a head fake driven by
investment not fundamentals.
No Boom- Correct!!! A
Predictions 2015
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Source: Yeskey Real Estate
Topic 2014 Actual 2015 Prediction
GDP 2.5% + 2.7% - 3.0%
Interest Rates Flat, slightly down Flat
Stock Markets 8-13%, USA #1 5% - 8%
REITs Up < 30% 10%
Cap-X – Business Investment USA; Mixed Flat
Dollar Flat, slightly up at YE Flat
CRE Great year Another good year
Residential No Boom- Correct!!! Slightly up
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We are in the sixth year of recovery… Will we make it to seven?
Recovery Expansion Boom Decline
ProductExtension
TIME
2009
2010
2011
2012
2013
2014
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A Seven Year of Expansion is Very Rare!
Recovery Expansion Boom Decline
Extended Expansion
TIME
2007-2008
2009
2010
2015-20162017
“Tipping Point”
Summary - Top Ten Issues 2012-2014
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2014
1.Real
Business
Investment
2.Residential
3.Government
Intervention
2012
1.Government
Intervention
2.Rules &
Regulations
3.Economy
Top Ten CRE Issues 2014
1. Business Investment
2. Residential
3. Government Intervention
4. Capital Markets & Alternative Investments
5. Costs – replacement & operations
6. Global – foreign in to US.
7. Traditional CRE Fundamentals
8. Development
9. CRE Equity including REITs
10.CRE Debt Including CMBS
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Summary - Top Five Issues 2015-2016
1.Domestic Economy; “Can we make history?”2.Global Economy; “Gloom grows”3.Capital Markets; “Reactions”4.Flows into CRE; “The yield chase”5.CRE Fundamentals; “Continue to improve”
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Some Interesting Misc. Exhibits
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Equity REITs– Outpacing Stocks in 2014
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Source: Yahoo! Finance, gold.org
Comparative Returns, Year End 2012, 2013 & 2014
12/31/12 12/31/13 12/31/14
Nikkei 225 (JP) 22.94% 56.72% 7.1%
NASDAQ Composite 15.91% 38.32% 13.4%
Russell 2000 14.63% 37.00% 3.5%
S&P 500 13.41% 29.60% 11.4%
DJIA (US) 7.26% 26.50% 7.5%
DAX (DE) 29.06% 25.48% 2.7%
NYSE Composite (US) 12.93% 23.18% 13.2%
CAC40 (FR) 15.23% 17.99% -.5%
FTSE100 (UK) 5.84% 14.43% -2.7%
Hang Seng (HK) 22.91% 2.87% 1.3%
DJ All Equity REITs (US) 14.29% -0.47% 30.14%
DJ All REITs (US) 13.00% -1.82% 27.20%
Barclays Aggregate Bond 2.70% -4.19% 6.0%
Gold 1oz Spot 8.26% -27.33% -1.5%
Predictions – Economy
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Source: Yeskey Real Estate
Topic Early 2011 What People
Were Saying
GDP3% to 4% Growth,
or Double-Dip Recession
Top Issue Jobs
Unemployment Expected to Remain Above 9%
Housing Turning the Corner
Our Prediction, Early 2011
1% to 2% Growth
Jobs
Stays High, But Dips Below 9%
Continued Decline
Actual 2011
1.7% Growth
European Debt
Yr End 8.9%
Declined
Predictions – Economy
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Source: Yeskey Real Estate
Topic Our Early 2012 Prediction
GDP 2%+ Growth
Top Issue Government Intervention
Unemployment Heading down, toward 8%
Housing Flat, But Bottoming
Actual
2.0, 1.3, 3.1
Govt. Intervention
7.8%
Bottomed
2013 Prediction
2.3 – 2.5%
Economy & Business
Investment
7.5%
Continued Slow Up
Predictions – Commercial Real Estate
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Source: Yeskey Real Estate
Topic Early 2012 Prediction
CRE Up Modestly
CRE Fundamentals Up More, Including NYC
EquityGreater Availability for
Money and Deals
REITsUp Year – Will Top Stock
Market Again
Debt Continuing to Open Up
CMBSTroubles Continue,
But Inevitable
Actual
Up Significantly
Up
Greater Availability for Money and Deals
Topped Stock Market Again (14-20%)
It has
Did until 4th Q 2012
2013 Prediction
Continues Up
Continues Up
Greater Availability for Money and Deals
Top of Market, beating gets tough
Slight improvement in non-core markets
Significant up year
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Y Yeskey Real Estate Consulting and Investmentswww.YeskeyRealEstate.com
Dennis P. Yeskey Yeskey Consulting (Yc) and Investments (Yi)
Mr. Yeskey is the Founder and Managing Partner for two firms: Yeskey Consulting (Yc) and Yeskey Investments (Yi). Yc is a unique company formed 5 years ago after Dennis’s retirement from Deloitte as the Senior National Partner in charge of Real Estate Capital Markets, and after over 40 years in the business world. Yc accepts a limited number of consulting and research assignments which are mostly focused on developing new business strategies, debt restructurings, and operational improvements across the Real Estate arena. Mr. Yeskey is also the Managing Partner of Yi which involves managing a family office and a series of private investments, along with developing new research boutique operation.
While at Deloitte, Mr. Yeskey was recognized as the senior leader of Deloitte’s Real Estate, Financial Services and Capital Markets Practices both domestically and globally. Initially, recruited by Deloitte’s Chairman to head the NYC office’s real estate services practice, he successfully restructured the practice and achieved and annual growth exceeding 25% with a staff of over 250 professionals. Promoted to the Group Managing Partner at Deloitte, he led a practice of over 1000 professionals focused on the real estate, investment management, private equity, hedge fund and insurance industries. He served on the New York Executive Committee, the firm’s National and Global Financial Services Practices and directed the financial services marketing and eminence building activities.
Before joining Deloitte, he was a partner and practice leader at Kenneth Leventhal and Co. from 1987-1995 where he initiated a new practice focused on institutional real estate, specifically, insurance based real estate. He is a long time member and Governor of ULI, as well as being very active on the Real Estate Round Table. He is a frequent speaker at numerous real estate industry events and author of industry publications. He received his MBA from Columbia University Business School along with an MS and BS from the Swanson School of Engineering at the University of Pittsburgh.
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