Commercial Real Estate Finance

Posts Tagged ‘federal government’

While attending RealShare Philadelphia 2010 recently, Dr. Peter Linneman, a renowned economist and UPenn professor spoke about the economy and its impact on real estate.  He made a very interesting observation regarding the stagnation in the economy, and subsequently, its strain on commercial real estate.

“How many of you watched the Super Bowl?” he asked. “What if when the Saints scored a touchdown, the refs decided to put up 6 points for the Colts?  What if when the Colts kicked a field goal, the refs decided not to award them any points?  What if the refs started making tackles and intercepting passes?  Would you bet on that kind of game?”  Rhetorically, he followed, “No, you would probably turn the game off after 10 minutes.  Why?  Because as entertaining as it may be, its a stupid game and impossible to predict the outcome.”

“Regulators enforce the rules of the game to be played, much like referees in sports. Right now”, Linneman says, “the Fed, FDIC, and Federal Government, all of whom are supposed to be regulators, and thus referees, are acting as players too.” Read the rest of this entry »

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A couple of months after I quit my job at JPM to join Llenrock, I had dinner with my former trading colleagues.  True to form, all we really talked about was trading.  And that, of course, led to talk about specific trades.  It’s the trading analogue to fishing stories about ‘the one that got away’.

In my book, at the time of my departure, was a losing trade.  i.e. I had already lost money on a trade, but had not yet cut my losses in the belief that the market would move my way.  In response to some teasing about the ‘bad trade’ I pointed out that, in fact, the traded ended up moving my way after I left.  I was basically saying, “Hey, I’m not such a dummy after-all.  While I lost money initially, the trade turned and ended up actually making money.”

The response to me: “It’s a mark to market business.” Read the rest of this entry »

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Real Questions…

…. and Un-intended Consequences

Question 1:

If you are a buyer of real estate (and actually have capital), what sort of IRR are you looking for? 20%? 30%?

Question 2:

If you are an owner of real estate, why on earth would you sell into this market unless you absolutely had to?

In the last installment of Real Questions… we talked about how buyers of commercial real estate are waiting for the sellers of the world to blink.

Read the rest of this entry »

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