Real Estate Rental Growth Rates at Different Points in the Physical Market Cycle

Real estate markets go through both physical cycles (demand and supply) that affect rental growth rates and financial cycles (capital flows to real estate) that affect property Prices (Mueller, 1995). This study develops a rental growth rate hypothesis based on a market’s position in the physical (demand-supply) market cycle. Using data from fifty-four office and industrial markets in the United States over a thirty-year period, an aggregated national average rental growth rate was calculated for each point in the cycle. An ANOVA test for differences of means found that the national average rental growth rates at each point in the cycle were statistically different. The results show local demand and supply, which interact to affect occupancy, are major determinants in rental growth rates. This research should help investors move from using a single rental growth rate for multiple year forecasts, to using yearly cycle driven rental growth rate estimates in their discounted cash flow projections.

The Effect of Interest-Rate Movements on Real Estate Investment Trusts

The rising interest-rate environment in early 1994 in the United States raised questions by investors as to how REITs will react to interest-rate movements. This study analyzes the movement of REIT price changes during past interest-rate cycles. The results indicate that REIT price movements have a low correlation with changes in interest rates and a lower correlation with interest rates than with movements in the stock market as a whole. The findings lead to a call for research into other areas in order to ascertain the determinants of REIT price movement.

The Evolution of the American Real Estate Society

The American Real Estate Society (ARES) started with the need for real estate academics to increase their applied research and teaching skills and grew rapidly as research practitioners realized the benefits of working with academics in their field. From its humble beginnings, ARES has grown to be the largest organization of real estate researchers in the world and has spawned a number of new real estate societies on a number of continents. The history of the ARES approach to being innovative and inclusive to all real estate thought leaders is chronicled in this article by two authors who met at one of the early pre-ARES meetings and have been both real estate academics and practitioners in their careers.

Real Estate Portfolio Diversification Using Economic Diversification

Previous work on real estate portfolio diversification by location began with geographic region diversification and moved to economically defined regions (a combination of economics and geography). This work takes the next step by removing the arbitrary geographic restriction and looking at the local economic drivers of individual metropolitan areas as the key determinant for more efficient diversification. The results show that economic diversification can be a more effective diversification strategy than previously used strategies that have geographic constraints.

Refining Economic Diversification Strategies for Real Estate Portfolios

Diversification of real estate portfolios has historically been accomplished by utilizing a geographic and/or property-type strategy. More recently, a number of economically based diversification categories have been proposed by industry researchers (see Hartzell, Shulman and Wurtzebach, 1987 and Wurtzebach, 1988). This study tests the efficiency of the existing geographic and geographic/economic strategies currently in the literature against an economically based diversification strategy using straightforward government SIC code categories. The three strategies used include: the NCREIF four geographic regions; the Solomon Brothers eight regions (a combination of economics and geography); and a purely economic grouping of the 316 MSAs in the United States using the nine major government SIC code categories. This study finds that the addition of economic underpinnings to a geographically constrained model, as developed by Hartzell et al. (1987) creates a higher risk/return efficient frontier than the purely geographic NCREIF diversification model. However, shedding geography altogether and diversifying along purely economic lines provides an even better efficient frontier during real estate cycle recovery and growth periods. This new strategy provides the real estate portfolio manager with the opportunity to increase risk-adjusted returns with a strategy that is easily understood and applied.

When Passive Index Investors Engage in Activist Corporate Governance: The Existence of Correlated Institutional Block Ownership Within REIT Capital Markets

The paper shows that Vanguard has approximately a 20% stake in almost 80% of all publicly traded REITs. Other institutions, many of which are index mutual funds and ETFs, also consistently own blocs in the same firms. Results show that passive institutional investors engage in firm-specific activist corporate governance. Aggregate correlated bloc ownership by these institutions both increases the likelihood of REITs’ obtaining new equity capital (SEO) and corporate control changes such as mergers, liquidations, decisions to go private, and removal from established stock exchanges to trading on the pink sheets that remove firms from indexes

The Impact of Inflation and Vacancy on Real Estate Returns

The impact of inflation on the value of assets is considered one of the primary financial concerns of long-term investors. While actual and expected inflation have slowed considerably since the early 1980s, concern over future increases is still a consideration for long-term investors.Ibbotson and Fall, Ibbotson and Siegel, Brueggeman, et al., Fogler, hartzell, et al., and Rubens, et al., conclude that real estate compensates the investor for inflation risk. When real estate is added to a mixed-asset portfolio, the inflation risk of the expanded portfolio is substantially below that of the original portfolio (ex-real estate).The purpose of this study is to examine the relationship between the performance of commercial real estate and inflation. Unlike previous studies, this study examines real estate performance during both high and low inflation periods. The results show that real estate does provide an inflation hedge. Second, real estate returns are broken down by two major property type categories (office and industrial) to determine if any property type differences exist. A major difference is found between the inflation hedging effectiveness of office and industrial properties. Third, the differences are further analyzed in relation to vacancy rates in the two property types. A structural imbalance in the office market is evidenced by high vacancy rates. Therefore, the relative impact of vacancy rates upon office and industrial property performance is examined and found to be a significant factor in explaining returns, thus affecting inflation hedging characteristics.

A comprehensive portrait of the venom of the giant red bull ant, Myrmecia gulosa, reveals a hyperdiverse hymenopteran toxin gene family

Ants (Hymenoptera: Formicidae) are diverse and ubiquitous, and their ability to sting is familiar to many of us. However, their venoms remain largely unstudied. We provide the first comprehensive characterization of a polypeptidic ant venom, that of the giant red bull ant, Myrmecia gulosa. We reveal a suite of novel peptides with a range of posttranslational modifications, including disulfide bond formation, dimerization, and glycosylation. One venom peptide has sequence features consistent with an epidermal growth factor fold, while the remaining peptides have features suggestive of a capacity to form amphipathic helices. We show that these peptides are derived from what appears to be a single, pharmacologically diverse, gene superfamily (aculeatoxins) that includes most venom peptides previously reported from the aculeate Hymenoptera. Two aculeatoxins purified from the venom were found to be capable of activating mammalian sensory neurons, consistent with the capacity to produce pain but via distinct mechanisms of action. Further investigation of the major venom peptide MIITX1-Mg1a revealed that it can also incapacitate arthropods, indicative of dual utility in both defense and predation. MIITX1-Mg1a accomplishes these functions by generating a leak in membrane ion conductance, which alters membrane potential and triggers neuronal depolarization. Our results provide the first insights into the evolution of the major toxin gene superfamily of the aculeate Hymenoptera and provide a new paradigm in the functional evolution of toxins from animal venoms.ARC, NHMR