Guest Speakers: Philip Marra + Robert Fraher – KPMG

October 19th brought Philip Marra and Robert Fraher to the Oak Room in Newman Hall. Mr. Marra is the Partner in Charge of Northeast Real Estate Practice at KPMG and Mr. Fraher is a Partner, Finance Services, Real Estate.

In short, their team at KPMG helps RE companies through their life cycle (e.g. acquisition / capital raising, operations, value enhancement, disposition . . .).  KPMG is a big brand, but the RE component here in NYC is small ~ 200 professionals.

The duo discussed their role in helping RE firms navigate areas of specialty that they may not have in house.  Throughout their offices across the world and the US, one rule always holds:  real estate is a local business.  You have to know the local market and rules.

Debt maturities is an issue that is coming up.  Banks have worked through most of their worst loans here in the US.  There is a lot of debt maturing in the CMBS market. Those that were done at the height of the market (’05-06′) and those continued through extend-and-pretend assets.  So there is a lot of volume on the horizon.  With only 70-80 LTV, one looming question will be:  “how will the industry address the loans coming due in the new-world order of finance and liquidity?”

Dodd-Frank is affecting RE through the registration and custody issues.  Most private fund firms will now come under SEC scrutiny.  They must soon be run  by a registered real-estate adviser (no licensing, but they do have to register.) It will restrict the amount of investment they could do and the salaries of key individuals

The Volcker rule will restrict proprietary trading. Goldman Sachs and others will have to decouple from the Real Estate fund business.  The rule changes will probably create a lot of boutiques.  Not sure how it will play out, but there will be impact

Questions:

Describe a typical (or maybe ideal) person who enters this field or joins your team?  A lot of people arrive through accounting and finance and though law school. Many people come from industry as construction managers and engineers.  We hire many attorneys, economists, actuaries, even a retired police officer.   These are often for management and operations, P&T practice (performance and technology).

Do you prefer candidates straight out of graduate school or those who have experience?  Both avenues work, it depends on the individual.

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