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10th Annual Alumni Business Conference--REFIC Panel
- 1. Capital Markets Overview CAPITAL MARKETS OVERVIEW
- 2. DEBT PLACEMENT INVESTMENT SALES PRIVATE EQUITY & CORPORATE FINANCE STRUCTURED FINANCE NOTE SALES & NOTE SALE ADVISORY LOAN SERVICING Special “thank you” to Mark Gibson, Colby Mueck and HFF. Much of the analytical data compiled by HFF and provided by noted sources.
- 3. Capital Markets Overview DISCLAIMER Forward-‐Looking Statements Certain statements in this presenta-on are “forward-‐looking statements” within the meaning of the federal securi-es laws. Statements about our beliefs and expecta-ons and statements containing the words “may,” “could,” “would,” “should,” “believe,” “expect,” “an-cipate,” “plan,” “es-mate,” “target,” “project,” “intend” and similar expressions cons-tute forward-‐looking statements. These forward-‐looking statements involve known and unknown risks, uncertain-es and other factors that may cause results and performance in future periods to be materially different from any future results or performance suggested in forward-‐looking statements in this presenta-on. Investors, poten-al investors and other readers are urged to consider these factors carefully in evalua-ng the forward-‐looking statements and are cau-oned not to place undue reliance on such forward-‐looking statements. Any forward-‐looking statements speak only as of the date of this presenta-on and, except to the extent required by applicable securi-es laws, HFF (the Company) expressly disclaims any obliga-on to update or revise any of them to reflect actual results, any changes in expecta-ons or any change in events. If the Company does update one or more forward-‐looking statements, no inference should be drawn that it will make addi-onal updates with respect to those or other forward-‐looking statements. Industry and Market Data In this presenta-on, we rely on and refer to informa-on and sta-s-cs regarding economic condi-ons, trends, and our market in the sectors of that market in which we compete. In par-cular, we have obtained general industry informa-on and sta-s-cs from certain third-‐party sources. We believe that these sources of informa-on and es-mates are reliable and accurate, but we have not independently verified them.
- 4. Capital Markets Overview $89 $106 $131 $213 $364 $427 $574 $175 $68 $146 $234 $297 $361 $418 0% 1% 2% 3% 4% 5% 6% $0 $100 $200 $300 $400 $500 $600 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Billions Total 10yr UST Source: Real Capital Analy-cs U.S. Real Estate Investment AcOvity Property Sales ($B) Down 88% From Peak 2010 Up 117% vs. 2009 2012 Up 29% vs. 2011 2003 – 2007 10Y T averaged 4.40% 1998 – 2012 10Y T averaged 4.22% 2013 Up 19% vs. 2012 2011 Up 59% vs. 2010 10yr UST Decade Avg. Med. 1962 -‐ 1969 4.85% 4.61% 1970 -‐ 1979 7.50% 7.50% 1980 -‐ 1989 10.58% 10.84% 1990 -‐ 1999 6.65% 6.50% 2000 -‐ 2009 4.44% 4.43% 2010 -‐ 2014 2.57% 2.76% 5.00% 4.59% 4.00% 4.26% 4.28% 4.79% 4.63% 3.64% 3.24% 3.20% 2 .76% 1.79% 2.34% 2.52% Annual Average 10yr UST 2014 Up 16% vs. 2013
- 5. Capital Markets Overview $-‐ $50 $100 $150 $200 $250 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Billions 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 MulO-‐Housing Touching Previous Peak Volume Historical TransacOon Volume By Property Type Source: Real Capital Analy-cs Apartment Industrial Office Retail
- 6. Capital Markets Overview $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 NYC Metro LA Metro San Francisco DC Metro Chicago Boston Dallas South Florida Atlanta Houston Seacle Denver San Jose Phoenix No NJ San Diego Aus-n East Bay Philadelphia Inland Empire Tampa Charloce Minneapolis Orlando Raleigh/Durham Portland Bal-more Las Vegas Nashville San Antonio TransacOon Volume ($MM) Office Industrial Retail Apartment Hotel Land Source: Real Capital Analy-cs TransacOon Volume Heavily Weighted To Top Twenty Markets But Investment Becoming More Broad-‐Based YTD Nov 2014 US CRE TransacOon Volumes Top 10 Markets $182.6 Billion 65.9% of Top 30 Markets Markets 11 to 20 $61.9 Billion 22.3% of Top 30 Markets Markets 21 to 30 $32.7 Billion 11.8% of Top 30 Markets “STEM” Markets
- 7. Capital Markets Overview Major Markets Have Recovered Peak Pricing Major Markets Are 11.0% Above Previous Peak – Non-‐Major Markets Are -‐9.7% Off Peak – NaOonal 0.2% Off Peak Major Markets Have Increased 81.1% Since Bocom, Approximately 1.4x 56.9% Gain By Non-‐Major Markets Source: Moody’s Analy-cs/Real Capital Analy-cs Major Markets include Boston, Chicago, Los Angeles, New York, San Francisco and Washington, D.C. This index measures prices changes in US commercial real estate, based on the completed sales of the same commercial proper-es over -me, known as the “repeat-‐sales methodology.” 80 100 120 140 160 180 200 220 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Na-onal Major Markets Non-‐Major Markets
- 8. Capital Markets Overview Property Prices & Employment Growth A Strong CorrelaOon Source: NCREIF, Bureau of Labor Sta-s-cs, Bloomberg -‐5% -‐4% -‐3% -‐2% -‐1% 0% 1% 2% 3% 4% 5% -‐20% -‐15% -‐10% -‐5% 0% 5% 10% 15% 20% 25% 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 YoY Change (%) YoY Change (%) CRE Prices Total Employment
- 9. Capital Markets Overview What About Interest Rates? Property Sales Volume Has Increased In Prior Periods Of Expanding Interest Rates If Interest Rates Improve Because Of Expansive Economy Source: Real Capital Analy-cs, Goldman Sachs
- 10. Capital Markets Overview 10yr UST Yield Through YE 2014 3.65%? Source: JPMorgan Investment Management, HFF Research, Bloomberg Actual: 2.53% Actual: 2.49% Actual: 2.17%
- 11. Capital Markets Overview Source: Cornell University, Hodes Weill, October 2014 All CRE Investors Underweight & Increasing AllocaOons InsOtuOons Are Currently ~90 BPS Under-‐Invested & Increasing AllocaOons By ~20 BPS In 2015 2014 Actual % Invested vs. 2014 & 2015 Target AllocaOons 8.49% 9.38% 9.62% 7% 8% 9% 10% 2013 2014 2015f 2014 Actual 2014 Target 2015 Target
- 12. Capital Markets Overview $25 $26 $37 $55 $70 $83 $85 $94 $80 $93 $79 $114 $32 $44 $50 $64 $91 $139 $129 $119 $160 $213 $256 $283 $58 $71 $86 $119 $161 $223 $214 $214 $240 $307 $335 $397 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Dry Powder Invested Total 9.2% Increase 27.8% Increase 12.3% Increase Closed-‐End Fund AUM Now Exceeds $390 Billion Dry Powder Available Exceeds $114 Billion 18.4% Increase 78.4% Increase Source: Preqin, latest informa-on available $Billions
- 13. Capital Markets Overview $167.5 $213.6 $0 $25 $50 $75 $100 $125 $150 $175 $200 $225 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Billions Open-‐End Core Fund AUM Now Exceeds $200 Billion 27%+ Increase Over 2008 Peak AUM 27.5% Increase Source: NCREIF, ODCE Fund 3Q14 14% Increase Vs. 3Q13