Commercial Real Estate Finance

Posts Tagged ‘Federal Reserve’

Week in Review for September 8 – 14:

- Both the Dow Jones and S &P 500 close at their highest levels since before the financial downturn on Thursday, thanks to the Federal Reserve’s announcement of new economic stimulus measures. Shares on the NASDAQ and NYSE also performed extremely well. The Fed’s stimulus is in response to recent disappointing employment data, which indicated a still-sluggish recovery.

- In a report by CoStar Group, analysts from the real estate investment community weigh in on the question of how the aging Baby Boomer generation will affect vacancy rates and housing prices, as well as the future performance of senior living real estate.

 - In Berks County, Pennsylvania, Dollar General Corp. (NYSE: DG) buys 110 acres from the Berks County Industrial Development Authority for $12.5 million. It has begun construction on a 907,000 SF distribution center there, which is scheduled to be completed in 2014.

- Empire State Realty Trust, a proposed REIT whose holdings would include the Empire State Building, announces the names of its proposed board of directors. Though an IPO is planned, it has not yet received full backing from its properties’ investors, particularly some legacy investors with stakes in the Empire State Building.

- Fitch Ratings says it is “very cautious” about how it rates CMBS attached to mid-tier retail malls. Public skepticism over the long-term viability of many malls has also led Moody’s to cut ratings on CMBS tied to such properties.

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http://www.noradarealestate.com/blog/government-handcuffs-real-estate-investors/

The good news, according to this article, is that multifamily assets are getting picked up on the offer side.  As you may remember, in 2009 and 2010 we talked about the intractable bid-offer spread in CRE: a situation where sellers weren’t being forced to sell (the offer side) and buyers were expecting large discounts (the bid side) yielding very low deal volume.  So, now we’re seeing  sellers who could hang in and actually get paid full price for their assets. Seems like pretty good news.

Like everything, however, there’s a cost.  According to the article, Read the rest of this entry »

It’s very tempting, given recent market volatility, to imagine Ben Bernanke looking over a metaphorical cliff like Corbet’s Couloir. I imagine Ben pushed up to the cliff’s edge by past policy, current politics, nasty demographics and feeling like if he doesn’t thread the needle, the whole global economy could go right over the precipice.

If the talking heads on CNBC are to be believed, everything is currently riding on Bernanke’s’ speech, this coming Friday.  Several people have suggested the equity market stopped going down because Bernanke is going to announce some sort of additional – largely un-described – “help” for the economy.  There’s been a lot of talk about the possibility of QE3.  I’m not holding my breath.

Before Bernanke’s famous speech in August ’10, CPI was printing negative.  The July ’11 print was 0.5%.  In July of ’10, gold was trading around $1200.  In July of ’11 gold was trading around $1700, on its way to a quick spike to $1900 before taking a brake – only, some people say, because of profit taking ahead of the Bernanke speech.  Inflation has to be at least on his mind.

Yes, he could take the 10 year down to 1% or below with even more quantitative easing.  I’m not sure he wants to.  He does have a duel mandated and he certainly can point some fingers at congress.  So, he could say the Fed is in danger of bumping up against the inflation and tell the market the fed is standing pat.

I would suggest, however, if he mentions the word ‘inflation’ outside the phrase ‘expectations remain well anchored’, the asset markets will get smoked.  If the Fed starts to focus on inflation the market can then be sure both fiscal and monetary stimulus are out of the question.

So, how does he manage to keep gold form spiking through $2000 (and dragging other commodities with it) without sending the S&P 500 down through 900?  I don’t know.  I wonder if just launching himself of the couloir is sounding pretty good right about now.

Unfortunately, life just isn’t fair sometimes, and not getting exactly what you want can really ruin your day. I know I find myself throwing some pretty embarrassing temper tantrums when things don’t fall in my favor. Well, that’s the way that large banks like JPMorgan Chase (NYSE:JPM) are feeling now that the Federal Reserve and Federal Deposit Insurance Corp (FDIC) officials want these same banks to hold an extra level of capital. Bank executives are saying that holding this extra capital will lessen the amount of loans they can provide to fuel the economy.

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Commercial Real Estate Week In Review For the Week of April 30th to May 6th

- Bernanke Urges Government to Avoid Burdensome Regulations on Banks.

- Hersha Hospitality Buys LA Marriott for $48 Million.

- REITs Resume Top Ranking in Equity Stocks.

- The Federal Reserve Wraps up Bond Buying Program.

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Likely overshadowed by President Obama’s budget speech, new developments on the foreclosure front emerged late last week. Working in tandem, the Office of the Comptroller of the Currency, the Federal Reserve, and the Office of Thrift Supervision ordered 14 financial institutions to change their current foreclosure processes. Part of the overhaul includes “a review of loans that went into foreclosure in 2009 and 2010,” as well an agreement among participants to stop foreclosing on homes in which the owners are actively negotiating for lower mortgage payments.

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So, do you know the subtitle to the novel “Frankenstein” by Mary Shelly?  I didn’t.  Turns out it’s: “The Modern Prometheus”.  This is, of course, a reference to the consequences of hubris – in the sense of human arrogance – and how mankind quite frequently creates its own monsters.  How is this relevant to you?  There are many examples but let’s stick to some recent examples: the BP Gulf spill, the Fukushima reactor, and The Federal Reserve. Read the rest of this entry »

In November 2010, the Federal Reserve laid all speculation to rest as it confirmed it would move forward with another round of quantitative easing.The U.S. recovery had been moving along quite nicely during the latter half of 2009 and first half of 2010, but in the latter portion of Q2 2010, the economy began to flatten out.An already fragile recovery started to look like it could bust into a million pieces at any point in time.This slow-down brought all the doomsday prophets out of the closer, and all of a sudden the financial media was littered with stories of a possible double-dip recession in the United States.

This potential for an even deeper downturn led the Fed to move forward with a second round of quantitative easing in hopes of stimulating economic growth and fighting off another economic downturn. Read the rest of this entry »

Steve Forbes is not a stupid man, so I’ll blame election season for the nonsense he spewed in this article. Please realize that I’m not endorsing a given political party or point of view. I’m just looking at some assertions that leave me wanting someone to seriously debate the issues at hand; rather than just looking for a way to compare Obama and Hoover. Read the rest of this entry »

John Maynard Keynes

One tool employed by non-rocket-scientists on their way to success on Wall Street is short-cuts; e.g. P/E, PEG…etc. Needless to say, actual rocket scientists also work on ‘The Street’. In recent years, they’ve focused on derivatives and their goal is frequently to distill complex matters into simple variables (short-cuts) the rest of us can understand. Things like delta, gamma and CDS spread, are all the end product of mathematicians and physicists who figured out Wall Street pays way better than academia. All of these metrics, to one degree or another, can end up as a vehicle for getting away from inexorable investing realities. Read the rest of this entry »