Commercial Real Estate Finance

Archive for July, 2009

10. Royal Bank of Canada

Size of Banking Industry: $1,700 billion (Canadian)
Key interest rate: 0.5%
Number of commercial banks: 21

Other Banks in Top 50
Toronto-Dominion Bank
Scotia Bank
Bank of Montreal
CIBC

Canada’s banks make up over half of the North American institutions listed on the rankings from Global Finance. Topping the Canadian banks is the Royal Bank of Canada, the country’s biggest bank with a market cap of $30.96 billion. Read the rest of this entry »

Jan A. deRoos, Ph.D.,
HVS International Professor of Hotel Finance and Real Estate, Cornell University Hotel School

Dr. deRoos, on the faculty of the Cornell University Hotel School since 1988, has devoted his career to hospitality real estate; with a focus on the valuation, financing, development, and operation of lodging, timeshare, and restaurant assets. He holds B.S., M.S., and Ph.D. degrees from Cornell University, all with majors in Hotel Administration.

Dr. deRoos is director of the Hotel School’s Center for Real Estate Finance. A frequent speaker on these topics, Dr. deRoos regularly contributes to lodging industry conferences in the Americas, Europe, and Asia. Prof. deRoos’ current research is focused on three themes; the design and implementation of hotel management contracts and hotel leases, investment returns to lodging properties and supply/demand dynamics of lodging markets.

Prior to his teaching career at Cornell, Prof. deRoos worked extensively in the hospitality industry. Industry experience includes work for the Sheraton Corporation in New York City, an engineering professional. He worked for Remington Hotel Corporation as Director of Engineering, responsible for the engineering operations and renovation planning of the firm’s owned and managed hotel portfolio, and as Senior Project Manager, responsible for the construction of new properties and renovation of existing hotels. During this period, Prof. deRoos was responsible for the construction of Marriott Hotels, Hilton Hotels, and Hampton Inns.

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Ever seen someone picketing outside an office building in a giant rat costume?  How about manning an inflatable 15 foot rat?  The latter was administered by 3 rotund union workers outside Llenrock’s office building yesterday for our landlord’s decision to, you know, try and operate a building efficiently.  Why would a landlord try and do something as silly as increase revenue, or in this case, decrease expenses? Its not as if they are trying to make a profit or anything.  The fact of investment real estate, capitalism, and life in general dictates that we should exploit every possible inefficiency there is.  Only a fool would do otherwise. This might remind you of the old adage “a fool and his money will soon be parted.”  Maybe bullied is a better word. Read the rest of this entry »

East Asia always seems to be on the cusp of invention, if not innovation.  Whether its  gas- sipping cars, robots, toys or textiles, they always seem to be one step ahead of the U.S.  And when it comes to the future of urban real estate development, they might be one step ahead of us again, at least according to this CPN article.

Sure, conceptually vertical development for retail makes sense in urban centers with increasing populations and dwindling development sites like New York City, Chicago and San Francisco.  After all, residential and office developments work vertically, and even self storage and parking garages have had success with vertical development on a limited site. Moreover, you can conceivably do all of your shopping in one stop.

So why wouldn’t it work in America? Read the rest of this entry »

In a recent Real Clear Markets article (see here), the author trashes Ben Bernanke.  The article is supposedly about how Bernanke’s term should not be renewed because he employs a hybrid approach (Philips Curve & Monetarist).  Why he thinks Bernanke should be doctrinaire about any given theory, I’ll never know.  He also says Bernanke doesn’t understand how the markets actually work.  It all ends up being a bunch of nonsense to justify a return to the gold standard.

In a classic example of academic knowledge vs. practical experience, the author does not understand how the markets actually work.

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How do you know what you’re condo is worth?

Let’s say you’re long a condo unit (or more). And let’s say the only trades in your local market are distressed in nature. i.e. it’s really hard to value the unit via comps. The rental market might provide some insight.

Here’s a suggested methodology.

Years ago, before the world went mad, I learned how to gauge if a tenant could afford to rent an apartment. I learned that rent shouldn’t be more than 1/3 of a person’s pre-tax salary. The same rule of thumb, I learned, could be applied to a home and the mortgage payment. Given a market rent, you can back into the theoretical value of the unit.

Here’s an example using three theoretical apartments.

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The Week of July 18-24

-And the list of failed banks keeps growing, and growing, and growing…

- Most news suggests, and has suggested for a while now, that the hotel sector is in the doldrums.  This news suggest the opposite.

- This just in!  Banks might actually have a plan for the glut of REO they will be facing.

- Zions Bancorp is preparing for the worst by benching 3/4 of a billion bucks. Read the rest of this entry »

Fifty-seven banks have failed this year, up from the 25 that shut down in 2008, which included Washington Mutual, the largest bank failure in US history. While the banks that have closed this year are not as large as WaMu, there have been some substantial banks that failed with assets in the billions. Click on to find out which of them rank as the 10 largest failures so far in 2009.

10. Omni National Bank (Atlanta, Ga.)

Closed: March 27, 2009
Assets: $956.0 million
Cost to FDIC: $290 million
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Mr. Glazer founded Keystone Property Group as a brokerage firm in 1991 and forged Keystone’s growth into an investment firm in 1993, to a development company in 1997, and to a real estate private equity firm that manages capital in 2003.

Mr. Glazer’s professional affiliations include the Young President’s Organization, the National Association of Industrial & Office Properties, the Wharton School’s Zell/Lurie Real Estate Center, Tristate Commercial Alliance and the Urban Land Institute and serves as a director on the board of Hyperion Bank, and the Jewish Federation of Philadelphia.

A graduate of the University of Pennsylvania (BA, 1990), Mr. Glazer is the recipient of many awards and honors, including the Chamber of Commerce Award for Excellence, the MS Leadership Class Award, the Philadelphia Business Journal’s 2006 40 Under 40 Award, a finalist for the Ernst and Young Entrepreneur of the Year Award.

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Ohh the power of social networking…I have a feeling the majority of you already know about some networking websites that are currently out there (Facebook, Twitter, LinkedIn, etc), but there are SO many more that are tailored to your needs and niches. In my line of work as a commercial real estate investment banker, you might wonder how this new age, hip social networking craze can be beneficial to such a unique business niche. Well, I’ll tell you – because at Llenrock, we are in tune with today’s trends.

The fact of the matter is that we understand the “social networking” philosophy – to socially engage those around you. You want to provide them with something of value, not some advertisement such as “Beautiful 3 Bedroom/2 Bathroom house for sale. FABULOUS! CALL TODAY!” That’s not how to network; that’s how to look desperate, and the majority of your audience is not going to even glance at your “fabulous” listing.

• Engage people!
• Talk to them!
• Think outside of the box!
• Keep it real!

Real estate marketing, be it at the corporate, property or personal level, has always relied heavily on relationships. There are several keys to promoting new, positive relationships via social media. Let’s review them…

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