Real Estate Investment Strategies
Banks have been systematically downsized
Average Return on Equity for all U.S. and EU Banks
25
Average ROE (%)
20
20
15
10
10
5
0
-5
Average U.S. ROE
Average EU ROE
☐
☐
☐
◉
Bank assets that still need to be sold
include:
Real estate (CRE / RRE)
Non-performing loans
Bad bank: assets, primarily in Europe
Structured products (ABS, CLO, legacy MBS)
Non-standard commercial credit
High yield securities
Businesses now considered non-core
include:
'90 '91 '93 '94 '96 '97 '99 '00 '02 '03 '05 '06 '08 '09 '11 '12 '14 '15
Equates to a $285 billion reduction in bank profitability
As of 31 December 2015
SOURCE: Federal Reserve Economic Data
RRE: Residential real estate, ABS: Asset-backed securities, CLO: Collateralized loan obligations, MBS: Mortgage-backed securities
PIMCO
☐
Non-prime credit (auto, unsecured consumer)
◉
Mortgage origination and warehousing,
particularly non-prime
■ Mortgage servicing
☐
Mortgage insurance
Insurance brokerage
Real estate development origination
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