Preliminary Proposition of a General Theory of Property Investment Decision Making European Real Estate Society Conference Vienna, Austria, July 2013 Professor David Parker

Slide 2 Overview Property Investment Decision Making: –Australian REITs –Australian Unlisted Wholesale Funds Literature Review Hypothesis Testing Findings Conclusions and Areas for Further Research

Slide 3 Overview Property Investment Decision Making: –Australian REITs –Australian Unlisted Wholesale Funds Literature Review Hypothesis Testing Findings Conclusions and Areas for Further Research

Slide 4 Overview “Extraordinary financial losses and market disruption in the late 1980s and early 1990s are eloquent, if damning, testimony to the proposition that the quality of many real estate decisions is less than distinguished.” Roulac (1994)

Slide 5 Literature Review Books, journals, conference papers REIT or unlisted wholesale fund specific Normative model Rational analysis

Slide 6 Literature Review Envisioning Stage Planning Stage Dealing Stage Executing Stage

Slide 7 Literature Review Envisioning Stage: –Vision –Style –Goals –Strategic Plan –Objectives

Slide 8 Literature Review Planning Stage: –Property Portfolio Strategy –Strategic Asset Allocation –Tactical Asset Allocation –Stock Selection –Asset Identification

Slide 9 Literature Review Dealing Stage: –Preliminary Negotiation –Preliminary Analysis –Structuring –Advanced Financial Analysis –Portfolio Impact Assessment

Slide 10 Literature Review Executing Stage: –Governance Decision –Transaction Closure/Documentation –Due Diligence/Independent Appraisal –Settlement –Post Audit

Slide 11 Overview Property Investment Decision Making: –Australian REITs –Australian Unlisted Wholesale Funds Literature Review Hypothesis Testing Findings Conclusions and Areas for Further Research

Slide 12 Hypothesis StageStep EnvisioningVision StyleGoalsStrategic PlanObjectives PlanningProperty Portfolio Strategy Strategic Asset Allocation Tactical Asset Allocation Stock SelectionAsset Identification DealingPreliminary Negotiation Preliminary Analysis StructuringAdvanced Financial Analysis Portfolio Impact Assessment ExecutingGovernance Decision Transaction Closure / Documentation Due Diligence / Independent Appraisal SettlementPost Audit

Slide 13 Overview Property Investment Decision Making: –Australian REITs –Australian Unlisted Wholesale Funds Literature Review Hypothesis Testing Findings Conclusions and Areas for Further Research

Slide 14 Testing Semi structured interviews Senior executives 11 ASX200 REITs 9 unlisted property fund managers Analysis - 0/1 matching

Slide 15 Overview Property Investment Decision Making: –Australian REITs –Australian Unlisted Wholesale Funds Literature Review Hypothesis Testing Findings Conclusions and Areas for Further Research

Slide 16 Findings - REITs

Slide 17 Findings - Unlisted

Slide 18 Findings - Combination

Slide 19 Overview Property Investment Decision Making: –Australian REITs –Australian Unlisted Wholesale Funds Literature Review Hypothesis Testing Findings Conclusions and Areas for Further Research

Slide 20 Conclusions Findings supportive of hypothesis Commonality of responses Sufficient to preliminarily posit a general theory of property investment decision making?

Slide 21 Areas For Further Research Small public and private property funds? Individual investors? Outside Australia? “Good” property investment decisions?

Preliminary Proposition of a General Theory of Property Investment Decision Making European Real Estate Society Conference Vienna, Austria, July 2013 Professor David Parker