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| Timothy Wallen, Chief Executive Officer & Principal, MLG Capital, a service provider at the marcus evans Private Wealth Management Summit Spring 2012, on commercial real estate investing. |
NEW YORK, N.Y., May 15, 2012 - (ACN Newswire) - When investing in commercial real estate, investors must make sure that the price per foot of the property is reasonable relative to the current market rents, according to Timothy Wallen, Chief Executive Officer & Principal, MLG Capital. Unsophisticated investors tend to look at the cash flow of an asset, without considering what rent they would get when the lease terminates, he adds.
Ahead of the marcus evans Private Wealth Management Summit Spring 2012, in Amelia Island, Florida, June 3-5, Wallen, from a commercial real estate firm attending the event, shares tips for investing in commercial real estate and what private wealth managers need to know.
- What is unique about your philosophy?
We adapt our strategies to current market opportunities; therefore, we are currently focused on re-capitalizing owners of commercial real estate who are facing difficulties. The White Knight strategy creates a nice investment opportunity for us, while giving hope to the asset's owner. Most other funds tend to have a Vulture approach, which does not always have a good outcome due to poor due diligence information or adversarial owners.
- How does commercial real estate add value to a private wealth portfolio?
Diversification away from the public markets would be one. Public REITs are paying yields in the 3.5 percentage range, whereas on the private side, we can produce a solid 7.5 - 8 per cent yield. That differential is the premium that people pay to have a public instrument that is more liquid than a private capital investment. Real estate also works as an inflation hedge.
- How should private wealth managers choose properties to invest in?
From a value perspective, it is important that the price per foot of real estate assets is reasonable relative to the current market rents. Unsophisticated investors tend to look at the cash flow of an asset and think it is a good deal without considering what rent they would get when the lease terminates. Partnering with experts is crucial, as they will have the depth of knowledge that is required to make the right investment decisions.
US commercial real estate markets were stable in the first quarter of 2012, according to Moody's. What is your outlook on the market, and what are the opportunities that investors could take advantage of along the way?
The market is going to be stable, but recovery will be slow as commercial real estate is driven by jobs. The retail sector relies on consumer spending, and we are seeing increased leasing activity in that space. Office and industrial are also driven by job growth, so they will improve when the unemployment rate drops.
The apartments sector has already recovered; however, there is a wide gap between the cost of construction and current market rents, so there is still potential for growth. It is crucial that investors buy properties at the right price and understand the mix of tenants. The decisions made on the front end of an acquisition - what is paid per square foot, the location of the property and its potential for appreciation - are critical.
About the Private Wealth Management Summit Spring 2012
This unique forum will take place at The Ritz Carlton, Amelia Island, Florida, June 3-5, 2012. Offering much more than any conference, exhibition or trade show, this exclusive meeting will bring together esteemed industry thought leaders and solution providers to a highly focused and interactive networking event. The Summit includes presentations on unconventional investment strategies, Federal Tax Policy challenges, risk management strategies and the family office governance structure. For more information please send an email to info@marcusevanscy.com or visit the event website at www.privatewealthsummit.com/TimothyWallenInterview
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Please note that the Summit is a closed business event and the number of participants strictly limited.
About MLG Capital
MLG Capital is a member of MLG's Family of Companies, the largest commercial real estate company in Wisconsin. Since 1989, MLG Capital has earned a strong reputation by focusing on maximizing its partners' capital. Through 54 private offerings, MLG Capital has built a portfolio consisting of real estate investments in shopping centers, office buildings, multi-family complexes, and retail and industrial properties. www.mlgcapital.com.
Contact:
Sarin Kouyoumdjian-Gurunlian,
Press Manager, marcus evans, Summits Division
Tel: + 357 22 849 313
Email: press@marcusevanscy.com
Topic: Research / Industry Report
Source: marcus evans Summits
Sectors: Daily News
https://www.acnnewswire.com
From the Asia Corporate News Network
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