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5 Ways to Keep Money

WASHINGTON DC 09.28.2017


Development, Design, Finance & Investment, Tenant Demands, and Asset Management

Paul DeMartini -- Tishman Speyer
Brandon Ernst -- Lincoln Property Company
Chuck Watters -- Hines
5 Ways to Keep Money
We surely know five ways to lose your money. But at Bisnow’s San Francisco Investment Summit Tuesday at The City Club, our top national experts offered five ways for investors to deal with risk in today’s uncertain economy.
1. Look Down Under
5 Ways to Keep Money
Kilroy Realty CIO Eli Khouri points to Australia as the world leader in financial health (also, we now know, the women's 4x100 freestyle relay). He believes Europe and the US should follow the Aussie model of defined contribution programs for retirement and medical benefits. He told our crowd of 170 that Europeans are going to have to make similar adjustments, including raising their retirement ages, but that his outlook for America has a chance to be more favorable. Given the clarity with the election in November (and support of free market growth policies) we could see a "robust recovery" in late 2013 to 2014.

2. Just Say No to Second Liens
5 Ways to Keep Money
Many companies attempt to gain security through second liens on assets, according to Clairvue Capital managing partner and CIO Jeff Giller. His strategy, however, is to provide capital at the vehicle level, “pricing capital much higher because we’re taking less security.” The interest rates are higher with less security, but it leaves more upside for the owner of assets, he says.
3. Sell
5 Ways to Keep Money
Reznick Capital Markets (soon to be CohnReznick) managing director Michael Hartman advises to sell, sell, sell! He says “there’s a lot of yield chasing right now, particularly in the six-pack” (NY, Boston, Chicago, LA, San Francisco, and DC). Michael says the market fluctuates quickly in the Bay Area and if you miss a window of opportunity to buy and sell, “you’ll probably get three windows in 10 years.” His strategy: deploy where there's less overpriced assets.Smaller markets with strong supply/demand characteristics provide a better risk adjusted return than gateway cities.
4. Shop Smart
5 Ways to Keep Money
Sometimes the best way to save money is to shop at discount. Starwood Capital managing director Marc Perrin focuses on buying distressed assets, nabbing properties for pennies on the dollar. Starwood recently purchased a site in Palm Beach, Fla at a 25% to 30% discount, Marc says. Another value play: an office building in Times Square, which they bought for $300/SF, he explains, and has “generated in the low teens cash-on-cash returns.”
5. Forecast
5 Ways to Keep Money
"If you’re going to take the risk, get the reward," says Rockwood Capital Partner Bob Gray (who, by the looks of this photo, is the most modest fisherman in the world). Get in front of a trend and anticipate where the market is going, becoming a value-added investor. Bob recently did just that with the purchase of a vacant 500k SF office campus on a 27-acre site in Mountain View, once home to HP. The property was rezoned for residential prior to purchase, but Bob says he identified a higher value reusing the asset as office rather than single-family development.