As has been reported for weeks, Weyerhaeuser Co. in December voted to become the a REIT. Dan Fulton, president and chief executive officer said, "“Our company will be enhanced by the REIT structure,” This conversion will position us to be more competitive in our timberlands business. In addition, we are able to convert with our existing business mix of Timberlands, Wood Products, Cellulose Fibers and Real Estate.”
No date has been set for the conversion to a REIT but it should be sometime in 2010 and will be based on economic conditions, any changes in tax policy and timing of the distribution of earnings and profits required under tax laws.
By the end of the year of conversion, Weyerhaeuser must issue a special, taxable dividend to stockholders of its undistributed earnings and profits. As of the beginning of 2010, Weyerhaeuser reports expected earnings and profits to total just under $6 billion.They said the dividend payment will be paid with company stock.
Weyerhaeuser Real Estate Division has three divisions including Weyerhaeuser Real Estate Company. WRECO is one of the largest homebuilders in the country.The division is an umbrella organization for six branded homebuilders. Another division is WREDCO- Weyerhaeuser Real Estate Development Company which sells timberland property in select markets across the US. They also have a division that sells non-timberland industrial surplus property.
For more information on their real estate divisions please visit www.weyerhaeuser.com/business/realestate
Surplus commercial real estate can present many challenges for CFOs. It can also have a positive impact on the bottom line if managed the right way. You need independent expertise that no real estate broker or real estate management company can provide. One company has been saving Fortune 500 companies millions of dollars on lease buyouts and terminations- Cambridge Consulting Group. Visit their website for more information on terminating some of your leased real estate.
Showing posts with label Institutional Real Estate. Show all posts
Showing posts with label Institutional Real Estate. Show all posts
Saturday, January 9, 2010
Tuesday, December 29, 2009
CALPERS Commercial Real Estate Strategy Led to Large Loss in 2009
By Arleen Jacobius
Pensions & Investment Age
Behind CalPERS' staggering real estate losses lies a strategy that took on too much risk and lacked adequate oversight.
Once the fund's star asset class, the real estate portfolio of the $201.1 billion California Public Employees' Retirement System lost nearly half its value during the one-year period ended Sept. 30. The fund's real estate consultant, Pension Consulting Alliance Inc., predicts losses will continue for at least another year.
At the heart of the problem is a freewheeling approach that took on massive leverage, gave enormous discretion to staff and experienced poor timing with its investments.
The decision-making process and risk management need to be much more rigorous, acknowledged Joseph A. Dear, who joined CalPERS as chief investment officer earlier this year. The control over leverage was not as robust as it needs to be, he added. The system will focus more on income-producing, less risky core investments in the future, he said.
“We're inclined toward investment vehicles where we have control,” Mr. Dear said. “This does not rule out fund investing,” he added.
“Hindsight suggests that a large number of CalPERS' real estate investments were extraordinarily ill-timed and inadequately underwritten,” said Stuart Gabriel, professor of finance and director, UCLA Ziman Center for Real Estate in Los Angeles. Mr. Gabriel is not connected with CalPERS.
In recognition of the portfolio's problems, the CalPERS board has imposed new limits on staff's independent investment authority, system officials are revamping its $13.5 billion portfolio and they might ax some of the fund's roughly 70 external real estate managers. (Already, MacFarlane Partners has resigned its account after a nearly $1 billion failed land deal.)
What went wrong?
Just more than two years ago, CalPERS' real estate portfolio was valued at $20.1 billion and staff estimated it would grow to $30 billion over the next five years.
What went awry? In the first half of this decade, when the real estate market was soaring, CalPERS began selling off its least risky, higher-income-producing core properties and shifting the portfolio emphasis to non-core, riskier investments. In particular, the system went after value-added real estate, taking on a bit more risk in the major property types, hotels, student and senior housing, and investing in opportunistic transactions, those taking on the most risk and leverage, according to CalPERS' 2007 strategic plan for real estate.
Some 61% of the portfolio now is in non-core investments as of June 30, the most current information available. So far, some of these strategies have been the worst performers. For example, the system's California Urban Real Estate portfolio lost 40.9% for the quarter and 56.7% for the year, ended June 30. Senior housing dropped 68.2% for the quarter and 71.9% for the year. Article continues at
For information on how you can reduce your commercial real estate lease obligations please visit www.commercialleaseterminations.com
Pensions & Investment Age
Behind CalPERS' staggering real estate losses lies a strategy that took on too much risk and lacked adequate oversight.
Once the fund's star asset class, the real estate portfolio of the $201.1 billion California Public Employees' Retirement System lost nearly half its value during the one-year period ended Sept. 30. The fund's real estate consultant, Pension Consulting Alliance Inc., predicts losses will continue for at least another year.
At the heart of the problem is a freewheeling approach that took on massive leverage, gave enormous discretion to staff and experienced poor timing with its investments.
The decision-making process and risk management need to be much more rigorous, acknowledged Joseph A. Dear, who joined CalPERS as chief investment officer earlier this year. The control over leverage was not as robust as it needs to be, he added. The system will focus more on income-producing, less risky core investments in the future, he said.
“We're inclined toward investment vehicles where we have control,” Mr. Dear said. “This does not rule out fund investing,” he added.
“Hindsight suggests that a large number of CalPERS' real estate investments were extraordinarily ill-timed and inadequately underwritten,” said Stuart Gabriel, professor of finance and director, UCLA Ziman Center for Real Estate in Los Angeles. Mr. Gabriel is not connected with CalPERS.
In recognition of the portfolio's problems, the CalPERS board has imposed new limits on staff's independent investment authority, system officials are revamping its $13.5 billion portfolio and they might ax some of the fund's roughly 70 external real estate managers. (Already, MacFarlane Partners has resigned its account after a nearly $1 billion failed land deal.)
What went wrong?
Just more than two years ago, CalPERS' real estate portfolio was valued at $20.1 billion and staff estimated it would grow to $30 billion over the next five years.
What went awry? In the first half of this decade, when the real estate market was soaring, CalPERS began selling off its least risky, higher-income-producing core properties and shifting the portfolio emphasis to non-core, riskier investments. In particular, the system went after value-added real estate, taking on a bit more risk in the major property types, hotels, student and senior housing, and investing in opportunistic transactions, those taking on the most risk and leverage, according to CalPERS' 2007 strategic plan for real estate.
Some 61% of the portfolio now is in non-core investments as of June 30, the most current information available. So far, some of these strategies have been the worst performers. For example, the system's California Urban Real Estate portfolio lost 40.9% for the quarter and 56.7% for the year, ended June 30. Senior housing dropped 68.2% for the quarter and 71.9% for the year. Article continues at
For information on how you can reduce your commercial real estate lease obligations please visit www.commercialleaseterminations.com
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