Pension Funds Reevaluate as Trophy Property Pool Dries Up
Wall Street Journal reports: Just as news of investor’s affinity for primary markets and trophy properties reaches a new crescendo, the Wall Street Journal recently reported that pension funds – an important slice of the institutional-grade investment class, which targets such top-tier assets – are “starting to back away from trophy properties in the most expensive real-estate markets over concerns a new bubble is inflating.”
The Journal illustrated just how frothy pricing in the nation’s leading markets has gotten over the past two years by citing data aggregated by Real Capital Analytics: “In May, a 36-story Manhattan tower at 750 Seventh Ave. sold for $485 million with a capitalization rate of 4% . . . A similar 44-floor building nearby at 1540 Broadway, sold for $355 million with a 6% capitalization rate in 2009.
The strong demand that has caused pricing for trophy properties to bounce sky-high since the downturn, and that has not been matched by a similar increase in income produced by such properties, has caused pension fund giants California State Teachers’ Retirement System and the Texas Municipal Retirement System to begin looking for other opportunities.
View the full article on Wall Street Journal: Pension Funds Reevaluate as Trophy Property Pool Dries Up
Articles related to this topic:
Bubble, Bubble, LTV, and Trouble
Can't Afford a Trophy Office Tower? Single-Tenant Properties May be an Alternative
Office Tower Duo Sells in Seattle for $480M , Confirming Interest in Trophy Assets Still Strong
Private Equity Firms Grow their CRE Investment War-chests
Florida Investors Still Playing it Safe with Focus on Core Properties
Europe's Leading Markets Still Magnetizing Investment Capital
North Carolina Triangle a Favorite Alternative to Primary Markets
Love of the Didgeridoo, or Higher Yields, Attracts Cross-Border Capital Back to Oz
Interconnected firms likely exposed to both sides of a property transaction
Posted by: Nina Turner