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Ep.12 Jon Martin - AEW Capital Management

Take a page out of Jon Martin’s playbook and learn how to approach internal networking, growth, and opportunity within an organization. Jon reviews his path to CEO at AEW Capital Management, LP—one of the largest investment management firms in the world—and reminds us just how powerful your first impression can be.

Show Notes

AEW Capital Management
AEW is one of the largest real estate investment management firms in the world, with over 900 employees in 19 offices across the globe. Specializing in managing real estate assets for institutional investors around the world, AEW offers a range of investment strategies, including core, value-add, and opportunistic strategies across various property types such as office, industrial, retail, residential, and mixed-use. AEW has over 800 clients globally with $87.5/€79.2 billion in assets under management across all property types in North America, Europe, and the Asia Pacific.

Private Equity
Private equity is often grouped with venture capital and hedge funds as an alternative investment that is not listed on a public exchange. Investors in this asset class are usually required to commit capital for a number of years with limited liquidity, which is why access to such investments is limited to institutions and individuals with high net worth.

Private Real Estate Fund
A private real estate fund is a comingled pool of capital from multiple investors that is used to purchase equity and/or debt interests in real estate assets. Private real estate funds are not listed on a public exchange and are therefore less liquid.  Real estate funds are generally invested at the discretion of a real estate investment manager rather than the individual fund investors.

Separate Accounts
A separate account (SA) is an individual account (fund-of-one) where an investor invests capital into equity and/or debt interests in real estate assets.  Separate accounts are not listed on a public exchange and therefore are less liquid.  Separate accounts generally provide the individual investor with more discretion over investment decisions. 

Global Securities
Global securities are shares, bonds, or other securities that are traded on international markets. Global securities can also refer to securities that represent multiple individual shares, and that facilitate the safe custody and administration of shares.
Public REITs
A real estate investment trust (REIT) is a publicly traded company that owns, operates, or finances income-generating real estate. Modeled after mutual funds, REITs pool capital from investors who earn dividends from real estate investments. Investors do not individually buy, manage, or finance any properties.

Risk Return Spectrum
The risk-return spectrum, also known as the risk-return tradeoff, is the idea that the higher the risk, the higher the potential return. For example, a low-risk investment will have a low potential return, while a high-risk investment will have a high potential return. 
Core Strategy
“Core” is synonymous with “income” in the stock market. Core property investors are conservative investors looking to generate stable income with very low risk. Core properties require very little handholding by their owners and are typically acquired and held as an alternative to bonds. This type of investing is as close as one can get to passive investing when buying properties directly. A core property requires very little asset management and is typically occupied with credit tenants on long-term leases.

Opportunistic Strategies
Opportunistic strategies are strategies that try to profit from inefficiencies, dislocations, and fundamental themes in the financial markets. These higher risk strategies can be at the macro, market sector, stock specific, factor, or even exchange level.

Value-Add Strategy
“Value-Add” is synonymous with “growth” in the stock market and is associated with moderate to high risk. Value-add properties often have little to no cash flow at acquisition but have the potential to produce a tremendous amount of cash flow once the value has been added. These building typically have occupancy issues, management problems, deferred maintenance, or a combination of all three. These investments require a deep knowledge of real estate, strategic planning, and daily oversight by their owners. Value-add investors tend to use between 60% and 75% leverage to generate annual returns between 11% and 15%.

PricewaterhouseCooper (PwC) is a multinational professional services network, known for providing audit and assurance, consulting, and tax services. It is one of the largest professional services firms in the world and is considered one of the Big Four accounting firms, along with Deloitte, EY (Ernst & Young), and KPMG. PwC has a presence in over 155 countries and employs over 284,000 people worldwide.