Commercial Real Estate Finance

Posts Tagged ‘Lehman’

Whenever someone tells me the market is wrong, I always take a second look.

Yes, we could spend hours debating efficient market theory. Instead, let’s just say markets are smarter than most traders and even more talking heads. So, when I read an article that says, basically, markets don’t have it right just yet, I ‘blog’ about it.

This article in the WSJ points out that in spite of a massive financial and economic disruption, commercial real estate markets have stubbornly refused to offer massive discounts. Why?

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Commercial Real Estate Week in Review-Week of May 30-June 5

-China paralyzes real estate market in a potentially overzealous attempt at stopping a real estate bubble.

-Is Equity One (NYSE: EQY)’s acquisition of Capital and Counties USA a sign of recovery?

-Durst vs. Related for right to buy into One World Trade Center.

-Mezzanine loans making a slow comeback into the commercial real estate market.

-Thor Equities outbids Vornado (NYSE: VNO) and SL Green (NYSE: SLG) for Takashimaya Building, in good position to purchase the building.
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Hint: Stuy-Town's not the biggest

Toward the end of last year, Jerry Ascierto of Apartment Finance Today published a list of the largest multi-family real estate transactions to have taken place in the ‘oughts.’  It’s no surprise that many of these deals were acquisitions of REIT assets considering few private owners own as many units as the large public companies.  The most interesting transaction in the list, in my opinion, is the #1 largest multi-family deal; not because of its size, but because the deal went through in spite of a collapsing CMBS market.  That deal was a harbinger of things to come.  When CMBS financing was unavailable, Fannie and Freddie stepped in to push the deal through.  Hmmm…that sounds like every other multi-family deal that has traded since then.

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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 »

Two years ago, when Llenrock Group was founded, we saw an opportunity to step into a niche role as a small investment bank that focused exclusively on small to mid-size commercial real estate transactions.  Shortly after we started, markets fell off a cliff.  As a result, the need for specialized I-Banks has become more obvious, and a lot of new players are jumping on the opportunity.  Crain’s New York Business published an article yesterday highlighting this opportunity and the I-Banks that are ramping up their teams to give the big dogs a run for their money.  What is the focus of these I-Banks and what differentiates them from the juggernauts on Wall Street?

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Did you see the movie, “A Beautiful Mind” (not “War Games”)? If you didn’t, don’t bother. The film is mediocre at best, and there are better ways to spend two hours. I only bring it up because it’s about a guy named Nash who overcame personal tragedy to win a Nobel Prize in economics. His work was mostly on game theory; one scenario being a Game of Chicken (Hawk-Dove).

You are probably saying “1) Russell Crowe is sort of annoying and, 2) I don’t know what this has to do with real estate.” My response: 1) I agree about Crowe and, 2) plenty.

If you are in commercial real estate, you are living with the consequences of several games of chicken. And, your future is a function of several more.

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Now he tells us!

If you’re reading this, I can’t imagine you’re exactly blown away by Mr. Ross’s ‘vision’.  We in the commercial real estate world have been living the slow motion train wreck for many, many months.  Ross’s comments are especially interesting, however, when you consider he participated in the purchase of $0.5 Billion of real estate debt on October 6th.  Perhaps it was the $1.39 Billion loan from the FDIC that made him more comfortable with the asset class.

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Poll a group of baby boomers and ask them if they ever expected to see General Motors file for bankruptcy in their lifetime. If they’re honest, the answer will be an unequivocal, collective, “NO WAY.” Well, here we are watching the American legend’s bankruptcy saga unfold. When giants fall, they fall hard. Take a look at some of these other fallen giant’s in this list of Top 10 Largest Chapter 11 Filings.

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