Posts Tagged ‘Ernst Young’

Green Buildings Weathering a Tough Economy

Monday, May 3rd, 2010

Building owners, users find green elements save money.Despite the troubled economy, commercial building owners retain their commitment to making their properties more environmentally friendly.  Going green saves building owners and users money and makes sound business sense.

“The fact of the matter is this is just good business – making buildings perform better,” said Dan Probst, an energy and sustainable development expert with Jones Lang LaSalle.  “It’s all about making existing buildings perform better.”  Probst was speaking at a seminar sponsored by the Urban Land Institute, the North Texas Commercial Association of Realtors and the Real Estate Council.  “Their shareholders, customers and employees care about it.”

“Today people simply expect it,” said Michael Buckley, a real estate professor at the University of Texas at Arlington, noting a shift in attitudes towards eco-friendly commercial real estate.  “Cost savings is going to drive things.”  Developers recognize that buildings with environmental and energy design built in have a four percent higher average occupancy and offer significant savings on utilities.  Additionally, corporate America has embraced the concept.

Ernst & Young (E&Y), one of the nation’s largest office tenants, is focusing on locating its offices in green buildings.  More than half of the 6,100,000 SF that E&Y occupies in the United States has energy savings ratings, according to Judy Barth Bowles, the accounting giant’s director of real estate services.  “We’ve looked at everything to maximize the dollars we spend,” according to Bowles.  “We are very cognizant of the energy consumption.  Landlords are very interested, and we give them the push.”

Obama Administration Gives Two Thumps Up to Flexible Workplaces

Tuesday, April 27th, 2010

White House conference advocates for flexible workplaces.  President Barack Obama and First Lady Michelle Obama are advocating for flexible workplaces by holding a Forum on Workplace Flexibility at the White House.  The forum was organized by the Council on Women and Girls, according to senior advisor Valerie Jarrett.

“Millions of women and men across the country struggle to balance the demands of their jobs and the needs of their families,” the President said.  Participants included numerous small businesses, as well as large companies like Sara Lee Corporation, Abbott Laboratories, Accenture, American Express, Deloitte & Touche, Ernst & Young, GlaxoSmithKline and Intel.

Sara Lee – which has 41,000 employees globally – is leading by example and offers flexible work arrangements such as non-traditional start and stop times; the option to work remotely; job sharing; leaves of absence; and what is known as returnships for mid-career employees who took several years off work, primarily as stay-at- home mothers, said Mark Demich, Sara Lee’s vice president of organization development.  According to Demich, his firm tries to “look at the whole person, not just a Sara Lee employee” and take into account commitments for child care, elder care or to schools, churches or community groups.

“If and when the economy starts to pick up and turn, I think our employees will feel well-treated, that we took into account their work-life balance and outside commitments,” Demich said.  The bottom line for Demich:  employees will be more likely “to stay and deliver more.”

Investors Still Wary of Distressed Assets

Wednesday, September 23rd, 2009

Commercial real estate investors are taking a wait-and-see attitude before jumping in and buying distressed assets, according to an Ernst & Young study.  “We haven’t seen many portfolio transactions so far,” says the study’s author, Chris Seyfarth, who is national director of E&Y’s non-performing loans.  “Given the size and the magnitude of the untitledproblem with banks, I think the expectation is that at some point we’ll start seeing sizable portfolio transactions.”

According to the E&Y study, 53 percent of respondents have purchased distressed or non-performing loans in the last 18 months.  Another 45 percent believe it is too early to even think of buying non-performing loans.  Distressed assets are “piling up faster than they’re being resolved,” Seyfarth says.  “The broad view is that commercial real estate assets are getting worse, not better, and that’s going to impact financial institutions.  The issue is that the price expectations are different between the two players, and in some cases significantly different.”

Only 35 percent of those investors claim to have return requirements above 20 percent, and an equal number actually are shooting for returns in the 10 percent to 15 percent range,” Seyfarth concludes.  Once the anticipated tsunami of distressed assets his the market, it could be met with a rush of pent-up capital, all trying to get the best deals at the same time – which may, ironically, further cushion price declines, resulting in a more competitive investment market.

News about the spike in housing starts and the buoyancy of the stock market, which has recaptured $3 billion in value in just a few months, suggests that the recession has at least stabilized and economic recovery is near.  This should encourage increased liquidity in the credit markets, eventually supporting the commercial real estate investment market.

Ernst & Young Examines Distressed Debt

Tuesday, July 14th, 2009

Ernst & Young recently conducted a distressed debt survey to determine who will be the most active direct sellers of non-performing loan portfolios.  The results are interesting.get-out-of-debt-feature1

  • 36 percent responded it will be regional banks and thrifts
  • 32 percent responded it will be money center banks
  • 13 percent responded it will be the United States government
  • 11 percent responded it will be insurance companies
  • 8 percent had no opinion

With pressure on banks to de-leverage and raise their book capital ratios, it is not surprising that they ranked first.  Time will tell.

Ginnie Mae Taking the Lead on Backing New Mortgages

Tuesday, May 26th, 2009

At a time when the CMBS market has contracted by 60 percent, a story that hasn’t gotten much attention is that fact that one slice of the securitized real estate market is doing phenomenally well.

Ginnie Mae (the Government National Mortgage Association) has provided $124.18 billion of liquidity to the secondary mortgage-backed securities market during the first four months of 2009.  $34.5 billion of that was issued during April alone.  By contrast, the government agency provided just $58 billion during the same time frame of 2008.h_sold1

Ginnie Mae helps American families own homes by securing government-insured loans to the Federal Housing Administration, the Department of Veterans Affairs, the Department of Agriculture’s Rural Development Program and the Department of Housing and Urban Development’s Office of Public and Indian Housing.

“We are stable, secure and steadily growing,” said Joseph Murin, Ginnie Mae’s president.  “Our issuance growth represents the trust that our issuers and investors continue to have in Ginnie Mae securities.  Providing a secure secondary market outlet for government-backed loans is absolutely critical as the economy continues to stabilize.”

Rebuilding the mortgage market is likely to start at the conservative end with investors looking for T-bill-type places for their money.  Ginnie Mae has become the blue chip of real estate securities.  We have to get over being a society of instant gratification because normality will return – in the words of Ginnie Mae’s Murin, “one deal at a time.”

The 7 Habits of Highly Effective CREs

Monday, April 21st, 2008

The Spring 2008 issue of Development Magazine quotes Mark Gibson, Leader, Strategy and Operating Real Estate Advisory Services for Ernst & Young, on the seven skills that corporate real estate executives should bring to the table, listing them in order of importance:

  • Project Management
  • Strategic Planning
  • Process Implementation
  • Understand the Business
  • Fortitude
  • Real Estate

Real estate makes the bottom of the list.  This is interesting and a concession to the idea that the new commercial real estate executive is largely a strategist with a global perspective who reports directly to the CFO and works to harmonize real estate with IT and HR to achieve enterprise-level objectives.  The one thing I think Gibson missed is CRM (Client Relationship Management) which remains, along with strategy, where the focus of the internal corporate real estate department is since the movement toward outsourcing began in the 1990s.