Jan. 6, 2023

Riding Coattails of Institutional Investors with Gunnar Branson


Big real estate investing business players are all over every asset class available. There is not one investment portfolio that they are not focusing on. In fact, there is a growing interest now in some other properties they have yet to invest in.

What are the chances of mom-and-pop real estate investing businesses thriving? Could this be the end of the small players in the industry? Is there any threat lurking around?

That and more we will find out in this episode.

Gunnar Branson is the CEO of AFIRE, an association for international real estate investors focused on commercial property in the United States. This group of institutional investors from 24 countries collectively manage approximately $3trillion in commercial real estate assets. Previously, Mr. Branson was the CEO of NAREIM (The National Association of Real Estate Investment Managers). His real estate background includes leadership roles with GE Capital Real Estate and Heller Financial. He also consulted companies such as Jones Lang LaSalle,

Wells Fargo, Wrightwood Capital, CIBC, and Fidelity on innovation, product development, and marketing strategies. Mr. Branson is a frequent speaker, for universities and professional groups, on television, and with TEDx, on the changing landscape of commercial real estate

In this episode, Gunnar shares what differentiates institutional investors from small players in the real estate business. He points out how they think of time and the scale with which they operate as the primary reason for its existence. He explained further that even with the massiveness in which they invest, he doesn't see any risk of getting small players out of the game; in fact, larger players can be part of smaller ones' exit strategy.

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What you will learn from this episode for 17 minutes:

  • Find out how institutional investors operate in real estate so small players can also scale as they do
  • Discover how small guys in the real estate industry can ride along the larger guys' success
  • Learn how mom-and-pop investors are at an advantage over big players in the industry

Resources:

Topics Covered:

01:47 - Defining institutional investor as it relates to real estate

03:47 - Investment portfolio institutional investors focus on

04:11 - Real estate portfolio institutional investors are focusing on

07:39 - Other asset classes that have seen a growing interest for institutional investors

10:39 - Where small players are at an advantage over the larger ones

12:51 - What is a sovereign group?

15:24 - How can small players ride along the success of large investors?

Key Takeaways:

"Part of what's been happening is, not just during COVID, the long-term lease they were investing in. It was typical for 20-plus year leases for large office tenants in these best-of-the-best buildings. You had a very stable asset. You had something where the tendency didn't flip over a lot and where you didn't have to worry about it every year like you do in multifamily. And where you had a very tangible asset that had value, not just for ten years, but for 100 years." - Gunnar Branson

"A lot of smaller groups have actually looked at institutional investors as an exit, as a way to say, I'm going to create a portfolio, I'm going to then sell that portfolio to a larger player. And that tends to be how that works."  - Gunnar Branson

"Quite honestly, most of the innovation needs to take place at a small scale before it gets to the large, but you know, to a certain extent, think of institutional players as these large creatures that, although they can be somewhat nimble, because of the people that are working inside these companies, they are really not interested in taking away the business of the mom and pops." - Gunnar Branson

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