Real Insight. Real Estate.

Posts Tagged ‘credit crisis’

An analysis of the housing crisis by Karl Case:

For the last few years, we have shed many tears
Living through a recession.
The economy’s broke and it’s not a joke,
When we talk of another depression.
Fifteen million without a job,
Foreclosures and banks that fail,
401K’s became 201K’s,
And everything’s up for sale.

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While many you have not even gotten to the ‘aftermath’ portion of the credit crisis, the federal government is busy not learning lessons with the benefit of hindsight.  Obama’s plan to funnel $30 billion to “small banks” is exactly the sort of central economic planning that effectively caused the crisis. Read the rest of this entry »

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Editors Note: This post is the second in a three day, three person opinion on the aftermath of the Stuyvesant Town/Peter Cooper Village deal going kaput. Yesterday Dave Jacobs wrote about its effect on the capital stack. Today Rich Weidel examines the effect on the CMBS market. Tomorrow, Dave Weinstein will explore the world of risk/reward. Stay tuned and enjoy!

Stuyvesant Town, bought for $5.4 billion in 2006 is now valued at $1.8 billion. After reading that Tishman is walking away from Stuyvesant Town and the $4.4 billion of debt piled up against the property, I’m wondering if CMBS defaults are going to become the next sub-prime mortgages. Is this the bottom, or just the beginning? Will CMBS defaults rip through the structured products market? It seems that we are at a crossroads, with arguments and predictions being made both ways. Regardless of what your gut tells you, the following chart from PREI shows the problem: Read the rest of this entry »

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I’m pretty sure I’m just paraphrasing Ben Franklin with that one. Last week, an article on Time magazine’s website purported that the massive trade imbalance between China and the rest of the world (but specifically the United States) has caused the Chinese government to take certain measures uncharacteristic of its past in order to maintain its own balance between consumption and savings.  Up until recently, America’s savings rate was hovering around zero percent.  Since the credit crisis, we’ve closed our collective wallet, and seen our saving shoot to a whopping (by our own standards) 4.5% of GDP.  Conversely, China’s savings rate, who at the onset of the financial crisis was saving roughly 10% of GDP has fallen by a similar margin. With the RMB (Chinese currency) being undervalued between 15-25%, many global economists have wondered why China has decided not to let their currency’s value float.  Instead, they have done everything possible to keep its value as close to 7 to 1 to the dollar (where it has been historically) as they can. The most intriguing aspect of these measures is not why they are doing what they are doing, but rather what they are doing, and the greater impact that could have on their economy down the road. Read the rest of this entry »

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We are all familiar with the risk proposition that life insurance offers.  Do I pay money now to ensure a secure future for my family in the future should something happen to me?  Or, do I invest and/or save that same amount of money, hoping I live long enough that it grows into a nice security blanket for my family before I go, saving the sunk cost of life insurance premiums in the process?  It essentially is a Catch-22 because without knowing the future, you cannot possibly know you are making the right decision.  It is a crap shoot.

One thing is certain however.  With the economy in the tank, society as a whole tends to think more in the here and now when it comes to costs than they do the future.  That means that there are significantly fewer people ordering life insurance policies in the past 12 months that in years past. That makes sense of course.  But we are ignoring another huge reason people are thwarting life insurance.  Premiums have been skyrocketing.  Why?  Commercial real estate…that’s why! Read the rest of this entry »

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Last week marked the one year anniversary of Wall Street’s collapse. There have been many stories about it in the press recently.  Here were our favorites:

1.  This is about Wall Street Jobs…most expected firms to shed jobs like crazy.  Turns out to be quite the contrary:

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Who Is Going to Fill the “Equity Gap”?

During the most violent convulsions of the credit crisis, Uncle Sam opened his checkbook and put capital directly into the US banking system. That was, of course, because the residential mortgage market was imploding. What about the much discussed impending commercial mortgage crisis? Who’s going to provide the much needed capital infusion to restructure billions of dollars worth of commercial real estate?

This little headline provides the logical answer. It’s likely to be a government; just not the US government. Read the rest of this entry »

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Jay H. Shah currently serves as Hersha Hospitality Trust’s (NYSE: HT) Chief Executive Officer and as a member of its Board of Trustees.  Mr. Shah is involved in all areas of the business with a particular emphasis on investor relations, capital transactions and acquisitions. Previously, Mr. Shah served the Company as President and Chief Operating Officer and prior to that he served as the Managing Director of the Hersha Group, a private affiliate of Hersha Hospitality Trust that provides hotel management, development and construction management services to hotel owners.

Prior to joining the Hersha organization, Mr. Shah was principal in the law firm of Shah & Byler, LLP, a real estate and construction specialty practice, which he founded.
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Last week, a report surfaced announcing the return of Mark Walsh (former head of Lehman Brothers global real estate group) to what’s left of Lehman Brothers to take over the crappy portfolio he once amassed during his tenure there. According to an article in the Wall Street Journal:

“Mr. Walsh and a team of former Lehman colleagues are setting up a new stand-alone business to manage the private-equity [real estate] portfolio. They stand to profit if the portfolio of distressed assets — for which they once paid top dollar — recovers only some of its value.”

On the surface, this is about as dumb as asking Dick Cheney the rules of firearm safety, Robert Hinckley Jr. how to assassinate a President, George W. Bush where to find Osama Bin Laden, or Bill Clinton to turn down the advances of unattractive women. Many a joke have been made thus far regarding the news, including outdated Brokeback Mountain jokes (i.e. “Lehman: Mark Walsh, I just can’t quit you” etc).
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Martin Cohen, Chairman and co-CEO of Cohen and Steers Capital Management, and pioneer in real estate securities investing, gives his outlook on commercial real estate.

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