Commercial Real Estate Finance

How shall I put this delicately? I have heard that sometimes, when the owner of an asset hires an expert to evaluate said asset, a potential conflict of interest can arise. The expert evaluator might, possibly be tempted to inflate the value of the asset to satisfy it’s client. I could even imagine a more aggressive owner putting a little pressure on the “expert” to inflate the value of the subject asset. While I’m not suggesting any specific person or company has ever done this, we should always be cognizant of where incentives lie. Read the rest of this entry »

If you enjoyed this post, make sure you subscribe to my RSS feed!

Ever since Pacific Investment Management Co. (PIMCO) assessed the insurance industry’s home-loan investments, insurance regulators have been looking for a firm to review Commercial Mortgage Backed Securities (CMBS).  Analysis of CMBS investments will help determine how much capital insurers must set aside to circumvent any losses at the expense of the consumers. Read the rest of this entry »

If you enjoyed this post, make sure you subscribe to my RSS feed!

Bloomberg published an article online yesterday about how States are racking up investment banking fees to refinance their debt.  These are the same large investment banks the State governments resent so much for making sub-prime loans to homeowners in their State, eventually triggering the downward spiral of their local economies.  Granted, the investment banking divisions of these banks never made sub-prime loans.  But these banks are so huge that the parent company under which the investment banking division falls, is ultimately the same company that was making home loans.  There’s something very distasteful about having to give your capital raising-business to an I-Bank that is owned by the same parent company as the mortgage-lender you distrust so much.  This is one major reason why you should rely on smaller, less complicated I-Banks to raise capital whenever possible.

Read the rest of this entry »

If you enjoyed this post, make sure you subscribe to my RSS feed!

Loren M. Balsam, CFA

Managing Director

Perseus Realty LLC

At PRP Real Estate Investment LLC, Mr. Balsam is charged sourcing and closing the firm’s US opportunity fund investments.  In addition, he serves on the firm’s investment committee and in integrally involved with the creation of the firms other investment initiatives.

Prior to joining PRP Real Estate Investment LLC in 2008, Mr. Balsam was a senior investment officer in the real estate group at Pyramis Global Advisors, a unit of Fidelity Investments. In this role, he is responsible for the sourcing, underwriting, closing and management of private real estate investments. Prior to joining Fidelity in 1997, Mr. Balsam worked in the Kenneth Leventhal Real Estate Group of Ernst & Young where he consulted on a variety of valuation assignments including appraisals, loan portfolio pricings, underwriting analyses, and lease structuring. Prior to Ernst & Young Kenneth Leventhal, Mr. Balsam was a senior associate at Coopers & Lybrand where he performed audits and reviews on the venture capital and real estate industries.

Mr. Balsam earned a B.S. from the Cornell University School of Hotel Administration and a M.B.A. from Cornell University’s Johnson School. He is a CFA Charterholder.

Q: How has your strategy changed as a result of the credit crisis?  Have you expanded/narrowed your acquisition criteria? If so, to what, and why?

Read the rest of this entry »

If you enjoyed this post, make sure you subscribe to my RSS feed!

Baron Hanson is the principal and lead consultant for RedBaron Consulting and Goal Line PR, a branding, strategy, and turnaround management firm based in Charleston, South Carolina. Hanson completed undergraduate and graduate studies at Harvard University, which included real estate finance and urban planning coursework. Goal Line PR recently launched OpenPop-UpShops.com, a global SSL website project linking CRE executives with Pop-Up Shop tenants and big-box retailers worldwide. He can be reached via Baron@OpenPop-UpShops.com, and @openpopupshops via Twitter and Facebook.

About a year ago, we wrote on the phenomenon of the Pop-Up Shop. We referred to it as a new phenomenon, when really it is anything but. Thanksgiving pumpkins and Christmas trees are sold via temporary roadside stands each year like clockwork. Concert memorabilia, event concessions, and even fireworks are sold via temporary tables, tents, or trailers. Vendors pop-up shop and close down according to event demand. In fact, The Super Bowl is one gigantic Pop-Up Shop. It lasts about three weeks all-in inside a different retail venue each year. The Masters Tournament is a seven-day Pop-Up Shop, only this store is held inside the same historic venue in perpetuity. Weddings are perhaps the second most profitable one-day-only Pop-Up Shops in history. Election Day precincts are of course number one. At this juncture in CRE history, it is time to apply the timeless idea of Pop-Up retail to appropriate empty spaces. Read the rest of this entry »

If you enjoyed this post, make sure you subscribe to my RSS feed!

National Economic Council Director Larry Summers discusses the Wall Street reform bill

It is more important to know the parameters of the EU’s bank stress tests than it is to know the results, Richard Portes from London Business School told CNBC Tuesday. Andy Brough from Schroders joined the discussion.

If you enjoyed this post, make sure you subscribe to my RSS feed!

Commercial Real Estate Week In Review for the Week of July 17-23

- Is Tim Geithner the biggest winner of  financial regulation reform passing this week?

- Meanwhile, Barney Frank is aiming to tackle Fannie and Freddie.

- GGP is finally ready to emerge from bankruptcy…and on strong financial footing.

- Innkeepers USA Trust is readying for bankruptcy.

- Private Equity still seems to be shying away from real estate int he second quarter.
Read the rest of this entry »

If you enjoyed this post, make sure you subscribe to my RSS feed!

If you had $1 million to invest, which would you choose?

1) S&P 500

2) 10 Year treasuries, or

3) a 6 cap multi-family deal (B in a B location) Read the rest of this entry »

If you enjoyed this post, make sure you subscribe to my RSS feed!

A “desert island” is one that is uninhabited by humans.  Usually this is because it hasn’t been discovered yet, the terrain is too tough to develop, or it is simply is too far away from a mainland to realistically support an economy. But what happens when islands that are created nearby a mainland for the sole purpose of development and occupancy by humans goes indefinitely uninhabited?  Perhaps those qualify as ‘deserted desert islands’. And if you want the scenic view of the economic crisis, deserted desert islands might be the place to start.  While Florida might provide you with some (oily) sand, vacant shoreline buildings, and some stalled beachfront developments, it is nothing compared to the picture above. That picture is of “The World,” a cluster of man-made islands off the coast of Dubai.  Read the rest of this entry »

If you enjoyed this post, make sure you subscribe to my RSS feed!

While many people are questioning the Federal Deposit Insurance Corporation’s (FDIC) strategy for managing assets seized from failed banks, we must look to the 1980’s Savings and Loan Crisis to see the reasoning behind their “risky business”.  In 1989 the Resolution Trust Corporation (RTC) was an asset management company established by the Financial Institutions Reform Recovery and Enforcement Act (FIRREA), and charged with the liquidation of insolvent assets belonging to failed banks.  These assets were primarily real estate-related assets, and between 1989 and 1995 the RTC closed or resolved 747 thrifts with total assets of $394 billion. Read the rest of this entry »

If you enjoyed this post, make sure you subscribe to my RSS feed!