University of Connecticut
March 28, 2009
Tiffany Burns Gherlone
GENERALLY ACCESSIBLE
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Table of Contents
SECTION 1 Research organization
2
SECTION 2 US market review
8
SECTION 1
Research organization
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Investment process
All key business units have representation on the investment committee
Portfolio managers are the internal agents of the client
Research provides input to the setting of portfolio and investment strategies
“Enhanced indexing” is used to set portfolio strategy framework for core portfolios
Acquisition team sources prospective investments and champions the underwriting
Multidisciplined approach towards acquisition and disposition
Asset managers are involved throughout the acquisition process and are responsible for delivering proforma performance
Portfolio managers direct portfolio and fine-tune/rebalance as needed
Target Market Selection/ Required
Return Analysis
Target Market Selection/ Required
Return Analysis
Portfolio Strategy
Formulation
Portfolio Strategy
Formulation
Ongoing Portfolio
Analysis and Repositioning
Ongoing Portfolio
Analysis and Repositioning
Multidiscipline Underwriting
Multidiscipline Underwriting
Investment Sourcing/
Screening by Acquisitions
Investment Sourcing/
Screening by Acquisitions
InvestmentCommitteeApproval
InvestmentCommitteeApproval
Target Market Selection/ Required
Return Analysis
Target market selection/ required
return analysis
Portfolio Strategy
Formulation
Portfolio strategy
formulation
Ongoing Portfolio
Analysis and Repositioning
Ongoing portfolio
analysis and repositioning
Multidiscipline Underwriting
Multidisciplined underwriting
Investment Sourcing/
Screening by Acquisitions
Investment sourcing/
screening by Acquisitions
InvestmentCommitteeApproval
Investmentcommitteeapproval
Source: UBS Global Asset Management, Global Real Estate Research.
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Ongoing functional support
Distribute and communicate research information to all business units
Support portfolio/asset management in portfolio analysis– Attribution analysis
– Performance reporting/benchmarking
– Back-testing
– Diversification analysis
Provide market research for acquisition/disposition– Member of every acquisition team
– Integrated in disposition decision making
Assist Client Service and provide response to ad hoc requests
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Research: Data/information and online systems
Full line of economic, demographic, capital markets and real estate market data
Research on Demand delivers market and submarket level information to the desktops of all UBS Global Asset Management, Global Real Estate-US professionals
Moody’s Economy.com Axiometrics Reis Reports Torto Wheaton Research CoStar MPF
NCREIF UBS Equity Analysts’
Reports Real Capital Analytics Morningstar DTZ Miscellaneous others
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Research on demand
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Investment objectives and philosophy
Enhance returns: – Recognize long-term economic and real estate trends
– Under- or over-allocate to property types and regions depending on outlook
– Target favorably priced markets
– Source and underwrite best investments in targeted markets
– Manage each investment as an operating business
Mitigate risks:– Minimize downside risk through investment selection and detailed underwriting
– Diversify portfolios
– Perform regular hold-sell analysis
SECTION 8
US market review
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-250
-125
0
125
250
375
500
625
90 92 94 96 98 00 02 04 06 08 10
Mill
ions
of sq
ft
0
5
10
15
20
%
Absorption (L)Completions (L)Vacancy (R)
Absorption, completions and vacancy rates
Apartment, office, industrial and shopping center absorption, completion and vacancy
Source: UBS Global Asset Management, Global Real Estate Research based on data obtained from Torto Wheaton Research ad Reis Reports as of 31 December 2008. Shaded area indicates forecast data.
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Commercial property fundamentals
Source: UBS Global Asset Management, Global Real Estate Research based on data obtained from Torto Wheaton Research and Reis Reports as of 31 December 2008.
US-I RD280508
-4
-2
0
2
4
6
8
10
12
14
Vacancy Rent Growth Completions as % of Inventory
%
1990-92
2001-03
2008-10F
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Relative supply
Source: UBS Global Asset Management, Global Real Estate Research based on data obtained from TWR and REIS as of March 2009. Any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets is not necessarily indicative of the future or likely performance.
New supply as percent of inventory
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Apartment Industrial Office Retail
(%)
1988-90 Avg2005-07 Avg2008-09 Avg20-Year Avg
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Disclaimer
This presentation is for informational purposes only and is not a recommendation to buy or sell any securities or make any investments. Segments of this presentation contain information relating to future prospects that are "forward looking statements", which are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include, but are not necessarily limited to, forecasts of revenues and expenses, lease renewals, capital expenses, market rent changes, discount rates and capitalization rates. The opinions expressed are a reflection of our best judgment at the time the report is compiled. UBS does not undertake to update information contained in this presentation, except in future presentations of a similar nature.
This material supports the presentation(s) given. It is not intended to be read in isolation and may not provide a full explanation of all the topics that were presented and discussed. Care has been taken to ensure the accuracy of the content, but no responsibility is accepted for any errors or omissions.
GL-I RD050308
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