It is a pleasure to utilize this, the inaugural Insight on Finance column, to reintroduce the Real Estate Finance Association to the readers of Banker & Tradesman and to discuss REFA’s role as the preeminent association of real estate finance and investment professionals in New England. Established 13 years ago, REFA’s mandate is to provide educational, social and networking opportunities to our approximately 1,300 members through chapters in Boston, Hartford and Fairfield/Westchester Counties in Connecticut. These opportunities most often take the form of cost-effective programs featuring the leading experts and opinion-makers in our industry. Through Boston University and the University of Connecticut, we also offer outstanding continuing education courses leading to the Certificate in Real Estate Finance degree. The highlight of each year is the annual REFA Gala dinner and celebration at which we present the Robert F. Swain Jr. Distinguished Service Award. This year’s Swain award will be presented on Nov. 7 to Kevin Phelan of Meredith & Grew in recognition of Kevin’s many professional accomplishments and his years of service to Boston’s charitable community.
At a fundamental level, involvement in a professional association of REFA’s quality is a simply a way of enhancing one’s business opportunities. It is a characteristic of human nature that we prefer doing business with people we know and with whom we are comfortable. Involvement in REFA, whether networking at a program or the Gala or participating more proactively in the organization through the work of its many committees, is an excellent way to establish and maintain mutually beneficial professional ties.
Self Educate
As importantly, we real estate professionals are confronted daily with the fact that our asset class is but a subset of the broader capital markets. Not only is real estate tied more closely than ever before to the cyclical and secular factors which affect the capital markets, but we must compete for debt and equity capital with a wide array of investment alternatives. So as to adapt successfully to these factors and remain current in an environment over which we often have little control, it is important to continue the process of self-education. A professional association such as REFA, with its access to the best minds both inside and outside of our industry, is an ideal venue in which this process can take place.
A good case in point is REFA’s most recent Roundtable Breakfast program featuring Mary Beth Shanahan, director of real estate for one of the largest defined benefit pension plans in the United States, the Public Employees’ Retirement System of Ohio. In a lucid and informative manner, Mary Beth explained real estate’s place within the asset allocation framework practiced by sophisticated pension investors such as Ohio PERS. Somewhat to the disappointment of the breakfast attendees, she explained that despite real estate equity’s relative attractiveness on a risk-return basis compared to stocks and bonds, the “tyranny of the denominator” is likely to preclude substantial new capital flows to real estate in an environment characterized by free-falling stock prices.
Mary Beth’s observations were presaged in January by those of a diverse panel of experts assembled for REFA’s annual Forecasting Luncheon. State Street Bank’s Chief Economist Fred Breimyer, real estate economist Ray Torto of Torto Wheaton Research and real estate practitioner Chuck Burd of Lend Lease took turns sharing their prognostications for 2001. Their “consensus” forecast, which can be characterized as mildly optimistic but decidedly unfrothy for the real estate markets and quite downbeat for the stock market, has thus far proven right on the money.
This spring REFA’s annual Symposium, co-sponsored with New England Women in Real Estate, addressed the challenges to real estate business models being posed by a major secular shift, the emergence of new information technology. After a far-reaching review of the competitive threats and opportunities posed by such technology by Pikenet founder Peter Pike, five industry leaders – David Kirk for appraisal, Joe Fitzpatrick for commercial leasing and sales, Amber Degnan for investment management, Susan Leff for mortgage finance and Peter Hobbs for research – explained how their firms and industries were adapting to new playing fields.
Other topics of genuine value to finance and investment professionals which REFA’s education programming has addressed include the difficulty of valuation in a volatile market environment; whether opportunistic investing still has a place in a mature real estate cycle; investing defensively in the face of economic uncertainty; and the particular issues now confronting the hotel, multifamily and retail property types. REFA members are looking forward with great anticipation to our Sept. 26 Fall Finance Conference at Bentley College, during which moderator George Fantini will explore the health of Boston’s suburban commercial and residential markets with noted authorities Tom Alperin of National Development, Paul Harrington of The DeWolfe Cos., Mike Hogan of MassDevelopment, Bill Ryan of Banknorth Group and MBA President-elect Jim Murphy of New England Realty Resources.
And of course there is the most recent factor with which we real estate professionals are struggling – the unspeakably terrible and cowardly events of Sept. 11. For mid-October, REFA is planning a respectful examination of the aftermath of that tragedy and its likely impact on the cost and availability of real estate capital.
