PREA: Notable quotables

End of day one and talk at the US Pension Real Estate Association's annual conference has already turned serious.

A panel of powerful institutional investors has warned fund managers to be “nervous” about the commingled fund model, insisting for larger players such as themselves, club structures are the way forward.

The remarks mirror a private closed-door session plan sponsors held yesterday ahead of the official start of the fall gathering in Beverly Hills, in which investors apparently had an extremely “vocal” debate targeted at GP behaviour in the run-up to the real estate bubble.

Such recriminations are to be expected considering the write-downs institutional and other investors have had to take in their portfolios. But GPs are fighting back in their own conversations at PREA urging public pension plans and the like to start being more constructive, more concerted and (surprisingly) more united as an investment group when facing the fund manager.

It's a typical day in the life of a PREA conference, you might say. Here, PERE presents a selection of some of the best quotes of the day:

“[The US] is very good at heart attacks. We are very bad at cancer. The problems facing us now are all cancerous [involving] the slow deterioration of the body in which there is no crisis, no flash point, but it will eventually kill us.”
CNN host Fareed Zakaria saying the US was good at dealing with quick crises, such as Lehman Brothers and 9/11, but bad at tackling long-running problems, such as the levels of debt being accumulated.

“[Real estate] is one of the greatest bespoke asset classes.”
Spencer Haber, chairman and chief executive officer of H/2 Capital Partners.

“We acknowledge there are significant problems facing commercial real estate … that being said, from where we stand now, there’s no current plans for a specific commercial real estate large-scale [government bailout] programme.”
David Miller, acting chief investment officer of the US Treasury’s Office of Financial Stability.

“If you look at the real big opportunity, it’s not about the price of leverage, it’s about the availability or lack thereof of leverage.”
Spencer Haber, chairman and chief executive officer of H/2 Capital Partners, talking about opportunities in the US government’s PPIP and TALF programmes.

“They seem less depressed than I do when I’m on the phone.”
Michael Carp, head of Americas investments at Singapore sovereign wealth fund GIC Real Estate, on his Asian colleagues’ sentiments about the general economic situation in Singapore.

“The GP should be nervous because certainly the larger investors have all been frustrated with the limited partnership model and have been really focusing on how to exercise better control and how to put their interests first.”
Graeme Eadie, senior vice president of real estate investment at Canada’s CPP Investment Board, on the commingled fund model.