Peter Linneman - Faculty Research in Knowledge@Wharton

On Shaky Ground: Commercial Real Estate Faces Financial Tremors

Wed, 22 Jul 2009 15:41:58 EST

As the global recession drags on, new concerns are rising about commercial real estate. Loans taken out during the boom years are coming due, but commercial property owners are contending with higher vacancy rates, lower rents and a less-than-receptive environment for refinancing their obligations. Industry analysts and politicians suggest that commercial real estate is about to become the next high-profile casualty in the ongoing economic meltdown. "The shoe has already dropped," says one Wharton real estate professor.

Coming Soon ... Securitization with a New, Improved (and Perhaps Safer) Face

Wed, 02 Apr 2008 17:52:07 EST

Securitization is often blamed for aggravating -- if not causing -- the subprime mortgage crisis that keeps roiling U.S. real estate and credit markets. By repackaging pools of mortgages into securities that could be resold to investors, the argument goes, securitization permitted unscrupulous underwriters to offer housing loans to poor borrowers and transfer the risk to Wall Street. How, then, will the present credit crisis affect the future of securitization? According to professors from Wharton's finance and real estate departments, securitization will not disappear -- but it is in for radical changes.

Real Estate Developer and 'Grave Dancer' Sam Zell: 'It's All about Supply and Demand'

Wed, 19 Sep 2007 15:42:32 EST

Sam Zell, the master real estate investor, has built a fortune on the cycles that shape his industry. These days, he believes the current turmoil in financial markets is more an emotional reaction to yet another period of excess rather than a true credit collapse. In a talk at Wharton moderated by real estate professor Peter Linneman, the Chicago-based investor said markets currently are spooked by problems with U.S. subprime lending. However, they still have capital to deploy, unlike other real estate downturns. "We're not really in a 'credit crunch.' I think what we are in is a 'confidence crunch,'" Zell told his audience.

The Real Estate Industry, though Volatile, Offers Riches to Those Who Know Where to Look

Wed, 02 May 2007 09:59:26 EST

While many Americans are worried that real estate prices have flattened and may even turn downward, some of the country's top commercial developers say there always is opportunity for those who manage their projects efficiently in a global market, focus on areas with growing demand and have the staying power to wait out the downturns. This was the consensus of a 2007 Wharton Economic Summit real estate panel which included executives from Apollo Real Estate Advisors, Sherwood Equities and Morgan Stanley's Direct Investing Group.

Global Hotspots in the Real Estate Business

Wed, 29 Nov 2006 15:45:38 EST

Emerging real estate markets in India and China, along with recovering property industries in Germany and Japan, are among the top destinations for global real estate investors, according to panelists at the Samuel Zell and Robert Lurie Real Estate Center's fall meeting. During a session titled, "Global Hot Spots -- How to Think about Hot Foreign Markets," Wharton real estate professor Peter Linneman called on each panelist to describe the markets they find most intriguing.

Connecting the Dots between Innovation and Leadership

Wed, 04 Oct 2006 14:39:32 EST

At a recent Wharton roundtable discussion on leadership and innovation, panelists were asked how the two are linked, and what single factor they think is most critical to innovation in their industry. The answers (in a word): culture, passion, marketing, among others. The event, during which panelists also reflected on their career choices, was part of Wharton's 125^th anniversary celebration.

Follow the Sun: Predicting Population Growth in the U.S.

Wed, 28 Jun 2006 15:11:00 EST

The greatest future growth in the United States is likely to take place in the West, the Sunbelt and along the I-85 corridor between Raleigh, N.C., and Atlanta, Ga. In a literal sense, Americans are following the sun, since factors such as the number of "bright" or "sun" days in January and the absence of winter heating costs are significant aspects of this anticipated redistribution of population, note Wharton real estate professors Peter Linneman and Albert Saiz in their study, "Forecasting 2020 U.S. County and MSA Populations." The areas that can expect the largest drop in population, or a slow-down in their rate of growth, are mostly in the Northeast, Mid-Atlantic and Midwest. "Americans are rapidly leaving cold, damp, and snowy areas for sunnier and drier climates," the authors write.

Protecting the Value of Real Estate-Rich Portfolios

Wed, 15 Mar 2006 08:41:13 EST

Perhaps more so now than in the recent past, the fate of the U.S. real estate market hinges on the behavior of interest rates. Meanwhile, the trend toward legally enforceable titles has only just begun in many emerging markets, making them an unsure bet for investors. Given these variables -- which are difficult to predict and represent significant risk -- many real estate entrepreneurs are looking for ways to protect their portfolios. While predicting the movement of interest rates is notoriously difficult, investors in real estate would do well to understand the market forces at work in the sector. In this special report, experts from The Citigroup Private Bank and faculty from Wharton weigh in on the direction the real estate market is headed -- in both the U.S. and abroad -- and offer insights on ways investors can reduce the risk exposure of real estate-heavy portfolios.

From Pro Footballer to Businessman: You're a Rookie All Over Again

Wed, 05 Oct 2005 16:04:41 EST

Hall of Fame footballer Ronnie Lott is sitting in front of a classroom, lecturing a small group of fellow players about the importance of learning the playbook. But the playbook that he is discussing has nothing to do with running and tackling. Lott is counseling a group of current and former NFL players on making the transition from pro football to business. It's part of a year-long executive education program called "Entrepreneurial Management: Transitioning with Success," organized by the Wharton Sports Business Initiative and sponsored by the NFL and the NFL Players Association. Lott's talk is one of the follow-up sessions that are a key part of the program, which focuses on everything from financial analysis and entrepreneurship to real estate development and stock market investing.

Is Commercial Property Still a Good Investment?

Wed, 27 Jul 2005 16:50:59 EST

These are blissful times for commercial real estate investors. Having fallen into a deep slump with the ending of the Internet boom, the market has come surging back. In 2004 alone, prices rose 26% for apartment complexes, 21% for industrial properties, 14% for retail properties and 6% for office buildings, according to Real Capital Analytics, a New York real estate research firm. At the same time, however, a number of major institutional and private investors have been selling off large chunks of their portfolios of prime commercial real estate and putting the sale proceeds into less expensive real estate or into other assets entirely. Wharton experts and others look at real estate's revival as well as its risks.

Are Easy Liquidity and Razor-Thin Returns Driving Real Estate to Dangerous Highs?

Wed, 13 Jul 2005 15:36:49 EST

Huge capital flows into real estate may represent too much of a good thing, according to participants at a recent meeting organized by Wharton's Samuel Zell and Robert Lurie Real Estate Center. According to Wharton professors and industry experts, excessive liquidity is leading to a decline in underwriting standards that potentially could hurt the industry in the future.

The Mega-Deals Are Back in Commercial Real Estate

Wed, 09 Feb 2005 16:50:03 EST

Investors who had fled bricks-and-mortar industries such as real estate during the dot-com and telecom bubbles have now returned with a vengeance. As a result, lots of capital is available for massive real estate deals, according to Wharton professors and industry experts who spoke at a meeting organized recently by the school's Samuel Zell and Robert Lurie Real Estate Center. Complexity and risks are high in such transactions, but so are the potential rewards.

A Real Estate Boomlet in Latin America

Wed, 22 Sep 2004 14:17:34 EST

Latin America's largest economic powerhouses, Mexico and Brazil, are enjoying a real estate revival that neither country has seen in years. Big-picture economic fundamentals, politics and recent laws welcoming foreign investment are helping to trigger building sprees in residential and commercial properties, observers say. As Rogerio Basso, a Miami-based Latin America specialist for Ernst & Young's hospitality and real estate advisory service, puts it: "There are good expectations for growth in both countries."

Why Real Estate Escaped the Recent Wave of Scandals

Wed, 30 Jun 2004 11:55:47 EST

Unlike the 1980s boom, whose aftermath revealed a host of shady deals between real estate developers and unscrupulous S&L executives, publicly traded Real Estate Investment Trusts (REITs) have largely been untouched by the most recent scandals in Corporate America. Sam Zell, chairman of Equity Group Investments of Chicago, believes REITs are likely to remain scandal-free. He and other executives discussed this issue and more at a recent conference of Wharton's Zell/Lurie Real Estate Center.

As Big Money Chases Real Estate, Markets Await Better Fundamentals

Wed, 21 May 2003 00:00:00 EST

Office markets are starting to recover on the West Coast of the U.S., and the recovery will soon spread to the East. That upbeat observation came from Sam Zell, chairman of Equity Group Investments, the biggest office landlord in the U.S. Zell and other experts were generally optimistic about real estate's prospects at a recent meeting of the Zell-Lurie Real Estate Center at Wharton.

What Does the Future Hold For Real Estate?

Wed, 20 Nov 2002 00:00:00 EST

Today�s flat economy, marked by slow growth and low interest rates, bears a close resemblance to the U.S. economy during the Eisenhower years, according to participants at a conference organized by the Zell/Lurie Real Estate Center at Wharton. Still, real estate investors can take advantage of cheap money to find attractive investment opportunities. According to one real estate executive, now is the time to �leverage the heck out of your assets with very cheap debt.�

Towards Greater Transparency in Real Estate Private Equity Funds

Wed, 31 Jul 2002 00:00:00 EST

At a time when stocks are volatile at best or tanking at worst, real estate private equity funds have delivered good returns � ranging from 14% to 20% � to their investors. Still, comparing returns from various funds is often difficult because of inconsistent reporting standards. A research paper by Wharton real estate professor Peter Linneman and a colleague argues that fund sponsors and investors would both be better served by greater standardization of disclosure rules and increased transparency.

Opportunities for B2B e-Business in Real Estate

Wed, 22 Nov 2000 14:28:29 EST

Real estate developers like John Bucksbaum, CEO of General Growth Properties, the second-largest owner and operator of shopping malls in the U.S., see lots of opportunities to expand their business on the Internet. Bucksbaum discussed the company�s e-business strategy at a real meeting of the Samuel Zell and Robert Lurie Real Estate Center. Other panelists discussed a wide range of other issues, from the impact of B2B e-business on real estate to the way demographics will shape the future of real estate demand.

Global Property Deals, CMBS and All That

Wed, 04 Aug 1999 13:54:32 EST

What do you need to know if you want to build a five-star hotel in Baku? Thomas Pritzker, chairman of Hyatt Hotels and Resorts, spoke about the promises and pitfalls of investing in the global real estate market at a recent conference organized by Wharton's Zell/Lurie Real Estate Center. Other issues that came up for discussion: The future of commercial mortgage-backed securities, the impact of technology on real estate, and value creation in real estate.

Will We Need More Office Space?

Wed, 23 Jun 1999 08:00:00 EST

Real estate developers sometimes worry that trends like telecommuting and downsizing will lead to the construction of too much office space for which there is too little demand. Are such fears realistic? Peter Linneman, former director of the Samuel Zell and Robert Lurie Real Estate Center at Wharton, answers that question with a resounding �no.� His research indicates that fears of the demise of the office space market in the U.S. are grossly exaggeraged.