So here it is, the black swan that so many in the private real estate market, and other markets besides, predicted would come.

Few in the sector saw a sharp correction coming from such an external source like a highly contagious virus. But as covid-19 forces increasing numbers of people to work from home or self-isolate, the impacts on financial markets are now being absorbed. For many organizations, contingency planning has found itself elevated to priority one status.

And while central bankers and policymakers pull their levers, much work is going on at the company-level, not only to mitigate the damage, but also to navigate new ways of working. Here are what six senior private real estate executives have to say about doing business in the first week of global lock-down:

At US manager TA Realty, partner James Raisides says the firm is glad to have completed its latest capital raising last month – $1.2 billion for its Realty Associates Fund XII fund. With the capital secured, patience and discipline will be key as the firm monitors changes that will unfold, Raisides tells PERE. “We have been through these cycles many times in the past. We are a real estate group that is seasoned and knows how to remain disciplined in a market like this.”

At the biggest US pension fund, the California Public Employees’ Retirement System, chief investment officer Ben Meng used the old British wartime motivational mantra of “keep calm and carry on” as he assured that CalPERS had already been preparing for a market downturn. He said its improved liquidity, total fund approach and investment decisions in the recent bull run had “put us in a better position than in the GFC.”

Also assuming a downturn on the near-term cards previously was Bavaria’s Bayerische Versorgungskammer, where the institutional investor’s head of real estate funds Rainer Komenda tells PERE that investment decisions will now be placed on hold “at least for another four to six weeks before we, hopefully, have a slightly better picture.”  By Komenda’s reckoning, the only thing being bought right now is time given the challenges of underwriting properties on pre-virus assumptions. Today’s mission at BVK is to analyze the €80 billion investor’s current real estate holdings for clues to determine future performance.

From neighboring insurer Allianz, Francois Trausch, chief executive of Allianz Real Estate, tells PERE the business will need to re-evaluate its underwriting of existing pipeline deals in terms of the pandemic’s impact on cashflows this year and next. “We are in a way in a very strange spot,” given that net operating income is likely to decrease but cap rates could compress further in light of recent interest rate cuts. And Trausch expects the velocity of dealflow to slow because of the difficulties performing due diligence, now in-person site visits are verboten. The insurer is searching for workarounds: in one multifamily deal, Allianz Real Estate has asked the seller to provide extensive photos and may consider sending drones to the properties for additional information.

While US and European markets have much to sort out in the near term, Sonny Kalsi, president of the New York-headquartered manager BentallGreenOak, tells PERE his firm has already seen signs of improvement in Asia. The company has spent recent weeks transitioning many of its 24 global offices to remote work and assessing current holdings. “We aren’t currently spending much time looking at new deals other than some in Asia that were in progress or very recently new to market,” he says. “We’re likely going to see activity first in Asia simply because they’re further through the progression of the market events than we are say in the US.”

In Asia, meanwhile, there is an aversion to cross-border trading owing to worldwide travel bans. Chiwu Park, managing director at Korean manager Shinhan Alternative Investment Management, tells PERE how “almost all Korean investors are shutting down their overseas investment programs,” though some domestic deals can still progress given the country’s “relatively stable” coronavirus situation. Analyzing hedging costs and the manager’s pre-deployed investments are a current priority. Park adds the Korean won’s relative movement against other currencies should make the country’s real estate more attractive to outside investors. For that, there are some early signs of interest from other Asian investors to take advantage of what he describes as probably a “short-term” window.

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