Carry out research, through a website search, into two major property companies with different approaches to managing investment portfolios. Critically appraise each approach and present an argument...

Investment Portfolio – Real Estate 1
Investment Portfolio – Real Estate
Investment Portfolio – Real Estate 2
Investment Portfolio – Real Estate
Introduction:
With the help of investment one is able to fulfill different needs. With the proper investment
planning and approach the company or individual is able to attain different benefits and return in
future. Every investment which is done by the company or an individual, a certain level of risk is
associated with the same.
The financial crisis which had occurred in 2007 was the crisis which has arouse in the mortgage
market and the real estate market. This financial crisis which occurred spilled the global credit
market, it lead to the reduction of the capital liquidity and increased the risk concerned with
capital. This Subprime Meltdown is also knows as “Subprime Collapse” or “Subprime Crisis”. In
the year 2007, as there was a decrease in the rates of the houses, so the banks started giving loans
to the borrowers. This was the stage when it was considered that real estate is at its boom and
thus, people took extra loans to purchase houses.
Real property is a significant component of the production function of many nonreal estate firms.
Roulac (2003) estimates that the book value of real property owned by non-real estate
corporations was approximately $8.6 trillion in the early 2000s. Moreover, $3.2 trillion of this
total represents “core” (i.e., non-specialized) business real estate suitable for third-party
investment by institutional investors. The companies usually choose different real estate
corporations to invest in because of diverse reasons which includes operational, financial,
cultural, and institutional factors (e.g., Smith and Wakeman 1985; Liow and Nappi-Choulet
2008; Yu and Liow 2009).
In addition to the ownership of real property, many corporations choose to deploy productive
real estate assets through leasing. With a strong focus on leasing the corporations are able to
attain tax advantage over the same which helps them in flexible capital holdings as the leased
assets are easy to deploy as compared to the owned assets. (Eisfeldt and Rampini 2009). In
addition, leasing frees up capital that can be used to invest in the “core” businesses of the firm
(Rodriquez and Sirmans 1996; Roulac 2003).
Investment Portfolio – Real Estate 3
Real estate is a particular form of capital whose return is highly dependent and based on
marginal productivity and diminishing marginal returns. The investment in the real estate is
highly dependent on the nature of the agents, on their balance sheet, and on complementarity
between their propensity for risk and inclination to expectation.
Real Estate companies:
The two major companies that has been taken into consideration for the analysis are Valuation
Management group and Renters Warehouse
Valuation Management Group:
Valuation Management group is one of the biggest real estate company of USA which was
established in 2006 with a focus on offering outsourcing opportunities for appraisal
independence. The company follows different investment approaches with which they are able to
manage their investment. The company follows a mix approach for investment where the
company invests the capital in stocks as well as bonds. The company has a strong focus on
rebalancing strategy which is the approach that the company uses for the investment. The
company also has a strong focus on asset allocation with...