Institutional Real Estate Analysis

By Grissom, Terry V.; DeLisle, James R. | Real Estate Issues, April 1996 | Go to article overview

Institutional Real Estate Analysis


Grissom, Terry V., DeLisle, James R., Real Estate Issues


The increase of institutional involvement in commercial real estate has heightened the interest of many Counselors of Real Estate (CRE) and other professional service providers in this segment of the real estate market. The equity interest held by six key institutional types as of mid-1995, is approximately $232 billion, the debt funds are approximately $982 billion. Pension funds are the leading holders of equity real estate, followed by life insurance companies and REITs. On the debt side, the key players are the traditional real estate institutions of commercial banks, life insurance companies and thrifts. Pension funds and REITs are only minor debt holders. Foreign investors and foreign banks also are relatively active in both capital sectors (12.3 and 10.5 percent respectively).

Figures 1 and 2 address the relative positions of equity and debt institutions over time. Changing levels of participation are presented in these dynamic illustrations. In general, the more traditional institutions are declining or stabilizing, while the previously designated alternative capital sources of REITs, foreign investors and pension funds are increasing. The magnitude of the institutional market and the changing structure of participants can impact the decision process and approaches to real estate problem solving which, in turn, affects real estate clients and the professional services they require.

An Institutional Framework

This brief overview of the institutional market reflects the thought process, concerns and perspective of many institutional decision makers. They want to position themselves relative to the capital markets and so frame their analysis on the deductive reasoning and techniques taught and used in finance and economics. Practiced, influenced and educated in these areas, influential institutional managers have extended these tools to real estate. Institutional clients, by the nature of their concerns and responsibilities, must compare their real estate interest to capital markets and investment alternatives. Their overview is from investment alternatives and decision criteria, to appropriate investment markets, to possible property types and then specific properties.l However, responsibilities and many concerns require a broader perspective than a parcel-by-parcel view of real estate.2

Also, because institutional ownership is relatively long-term (liquidity is not a key concern given other investments and ongoing capital sources), trends and cycles are as important as current market performance (the traditional emphasis of real estate analysis). This often requires institutional work to link with prior research or to recognize the changes that have occurred over time.

An institutional group must be concerned with problems that often require an analysis of more than an individual property. The analytical unit may be a portfolio of properties, an urban market or comparative markets, a mixed asset portfolio or real estate related assets which vary in terms of private or public interests and debt or equity markets. The latter unit of mixed public/private, debt/ equity real estate related assets, often is referred to as the Four Quadrant Model or Paradigm and further promulgates the deductive approach used or required by institutions. It is a framework of analysis based on a collective asset format which mixes and groups by sources of capital and types of ownership.

Although individual parcel analysis will not become extinct and is necessary to achieve the deductive perspective, it often is used for institutional analysis in the form of secondary real estate databases and indices, rather than real estate's traditional singular transaction orientation. This runs counter to the traditional real estate scenario of inductive logic, beginning with a specific property and its specific market and expanding to more aggregated market and investment concerns. In traditional real estate analysis, information on the real estate is the primary data with the economic, financial and other aggregated data employed from secondary sources.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Institutional Real Estate Analysis
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.