CASE STUDY

RE Securities Portfolio Management

Case Study One

An existing client, a very large, diverse international financial services company, had been involved with real estate investing across the four quadrants of investing (debt, equity, public and private).

When their real estate direct investing group sought to provide a real estate securities product to its institutional clients, it retained Peters & Associates. After substantial research that included internal discussions across multiple divisions, we suggested a business model that integrated the work of their institutional portfolio managers with their retail money managers, who, as it turned out, had been including more real estate securities into their portfolios. This facilitated the sharing of the substantial knowledge base and expertise of the direct real estate divisions with the retail portfolio managers, so as to add value to the securities investment programs of both groups. We then recruited a team to start up a real estate securities investment division that could be marketed to both institutional and retail client network as a dedicated, stand-alone product group.

Case Study Two

We received a call from an individual who was managing a group of funds within an existing platform. His area of concentration was almost exclusively focused on public and private REITs and REOCs both within the US as well as internationally. He was considering the possibility of lifting out his funds from the broader platform within which they resided. His goal was to increase AUM’s for the current product offerings and enhance the strength of his bottoms up real estate expertise, so as to add credibility to whatever avenue he ultimately chose to pursue. He felt certain he could qualify as owner of the track records of his current funds and that the majority of his clients would follow as he had a readily demonstrable identity unique to his specialty versus the broader universe of products that the parent offered.

Our dialogue began with the assessment of the inherent strengths of his platform in its existing form and the risk reward ratios associated with disconnecting from the parent, so as to increase his profile as being fully and exclusively dedicated to real estate. We initially researched several possibilities: affiliate with an existing platform that was already dedicated to real estate investment management but didn’t have a RE securities capability; go out on his own to create and expand a unique presence (which included the assessments of competitors and the challenges of marketing to institutional and/or retail clients); and the identification of the possibilities and challenges associated with enhancing the visibility and growth of real estate within the existing platform.

We facilitated and managed a range of introductions and conversations within each category so as to provide him with the matrix of information required to make the decisions. Ultimately, the assignment concluded with his decision to expand his current platform’s capabilities and the recruitment of a well seasoned individual who had a combination of debt restructuring, acquisition and asset management within a direct investing platform, coupled with experience with managing a portfolio of real estate securities.