The Amb Consolidation Case Essay

2672 Words Jul 8th, 2014 11 Pages
The report presents a case about AMB, which is a leading pension real estate advisory firm that has recently proposed to turn itself into a publicly traded Real Estate Investment Trust (REITs) and is planning to persuade its client to contribute their real estate assets to create a new REIT. Furthermore, the report also includes considerations of Anne Shea, who is the Assistant Vice President at Curator’s Fund; which is considering exchanging her shares in the commingled fund for the shares in the REIT.
Real Estate Investment Trust (REITs)
Real Estate Investment Trust (REITs) invests in and own properties by offering investors a highly liquid method of investing in high-density markets. Most REITs earn their revenue from
…show more content…
Figure 1, sourced from a report by Morningstar, illustrates the performance of REITs from January 1989 to December 2009. Over this period, REITs were again the top performer with a compound net total return of 9.3 percent. Opportunistic funds came in second (6.1 percent), core funds third (4.4 percent), and value-added funds last (3.7 percent). The report explains that since real estate is subject to market fluctuations just like any other asset class, while REITs deliver higher returns, net of fees and expenses, than private real estate funds. When examining only bull markets as opposed to the full real estate cycle, REITs again emerged with superior returns. REITs delivered a cumulative net total return of 1,038 percent (14.5 percent annualized), compared with 959 percent (18.0 percent annualized) for opportunistic funds, 433 percent (11.7 percent annualized) for value-added funds, and 341 percent (10.2 percent annualized) for core funds.
Role of Pension Fund Manager for REITs and Private Real Estate Investing
The role of the pension fund manager will be to appropriately manage a diversified portfolio of investments in order to increase return and reduce risks. Further, REITs also provide increased liquidity because its securities are tradable in the market, will increase the flexibility for the company that will help in

Related Documents