Turnover Seen as Early Sign Rebound on Way

The turnover of senior real estate executives who focus on strategy or research has been unusually heavy over the past few months, a trend some view as a harbinger of improving conditions for capital-raising and acquisitions.

In the latest example, David Morrison, a former co-head of Morgan Stanley Real Estate’s Prime Property Fund, was named head of global strategy at fund shop CBRE Investors. Several other fund operators, life companies, REITs and brokerages also have made recent senior-level hires, including Allianz, Abu Dhabi Investment Authority, Cole Real Estate, Bentall Kennedy, RREEF and the brokerage unit of CB Richard Ellis. Meanwhile, American Realty Advisors and Invesco Real Estate appear to be looking to fill similar positions.

Openings for high-level research or strategy roles are somewhat rare, as executives tend to hold such positions for relatively long periods. But turnover is often heaviest after a downturn, when firms are preparing to resume capital-raising and property purchases.

In some cases, incumbents voluntarily leave to take advantage of new opportunities. Professionals in research and strategy are starting to explore their options, said Christopher Papa, a managing director at executive search firm Bachrach Group of New York. He has fielded calls from several executives seeking new positions in recent months — far more than normal.

Sometimes incumbents are being pushed aside for executives seen as better suited to deal with the current landscape. And sometimes, as in the case of the Abu Dhabi wealth fund, the position is a new one set up by a player entering the sector.

In the early stages of a recovering market, filling the top research and strategy posts is one of the top priorities of any real estate player that plans to become active again, said Asieh Mansour, who was named head of Americas research for CB five months ago. “It is a leading indicator that people are starting to again think relatively more optimistically,” she said.

Research and strategy professionals are integral to the process of raising capital. Having strong executives in those positions tells investors “we will in fact have more information, we will consider more factors, we will have a more sophisticated approach to investing,” said Steven Littman, managing partner at executive search firm Rhodes Associates of New York.

In some cases, investment shops are changing executives as part of a decision to seek higher yields because of the low returns on stabilized buildings in core markets. “People are shifting a little more up the risk spectrum, so there is a necessity to be a little more creative and insightful with what your investment strategy is,” said Marc Louargand, a co-founder and former chief investment strategist at Cornerstone Real Estate, where he launched the research unit. He is now a principal at investment management firm Saltash Partners of West Hartford, Conn.

At CBRE, Morrison will oversee investment and corporate strategy in coordination with the senior team, reporting to president Matt Khourie. Douglas Herzbrun will continue as global head of research and will report to Morrison.

Morrison spent roughly five years at Morgan Stanley, where he oversaw research and strategy for the Prime Property Fund. Scott Brown remains the portfolio manager of the core open-end vehicle.

About a half-dozen other high-profile investment shops have filled research or strategy positions recently. About a week ago, Gregory Brown was hired as head of research for the U.S. real estate equity business of German insurer Allianz. A few weeks earlier, Philip Conner jumped to the Abu Dhabi sovereign wealth fund from Prudential Real Estate Investors to work on research. He will function under Will McIntosh, head of research in the real estate department, who joined in January.

In June, Mark Roberts joined RREEF, the real estate investment arm of Deutsche Bank, as global head of research. He held a similar role at Invesco. And the month before, Cole Real Estate hired Indraneel Karlekar as executive vice president and chief investment strategist.

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