Commercial Real Estate Finance

Posts Tagged ‘loans’

Mensch:

Noun, informal. A decent, upright, mature and responsible person.

Schlemiel:

Noun, slang. An awkward, clumsy, or unlucky person whose endeavors tend to fail; a loser.

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Mensch of the Week:

Robert Rubin

Co-chair, Council on Foreign Relations & Former U.S. Treasury Secretary

Earlier this month, Robert Rubin spoke to CNBC about a comment made by Sandy Weill, his former colleague at Citigroup (NYSE: C). Mr. Weill said, in essence, that it would be wise for the U.S. government to split up financial institutions that are “too big to fail.”

Any matter that involves public and private interaction tends to be complex, not to mention controversial. Though many have railed against the “cozy” relationship between government and commercial entities, the interdependence of these two groups doesn’t always mean one side understands the other. Maybe the economic and regulatory problems highlighted by the Great Recession are just as much a product of this lack of understanding as they are of government/Wall Street cronyism?

Luckily, there are people like Robert Rubin, who have a depth of experience on both sides of the public/private divide. Mr. Rubin spent years as an executive with Goldman Sachs and later Citigroup, but also served as the Treasury Secretary during the Clinton years. Such a resume affords him a unique insight into the complex world of financial regulation. Read the rest of this entry »

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 June 4th to June 10th

- REITs Are the Light at the End of the Economic Tunnel.

- It’s Quality vs. Quanity With Glimcher Realty Trust (NYSE:GRT).

- REIT Investors May Need a Reality Check.

- General Growth Properties (NYSE:GGP) Refinances Five Retail Centers.

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Three weeks ago I wrote about the improving credit markets, with particular focus on the commercial real estate sector. To summarize, many of the larger commercial banks (as reported in the Wall Street Journal) , such as J.P. Morgan Chase & Co. and Wells Fargo, have begun to re-enter the market, but are doing so with caution. Nothing in the article suggested that there was any intention of returning to pre-financial meltdown levels. Nor did I get the impression that deals were being aggressively underwritten. I write this as background because a report released from Standard & Poor’s tells a different, almost contradictory, story.

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Private equity activity has steadily increased over the past year and by most projections, is poised to continue its trend upward in 2011.According to a report from Standard & Poor’s, more than $251 billion in junk bonds have been issued through November, which is a 75% increase over last years figures.Despite this uptick in activity, there is still skepticism over the merit of such movements.This is somewhat surprising given the historical dependence of private equity firms on the junk bond market for financing.Since the early 1980’s, many transactions have been fueled by the availability of high-yield debt.

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While the hip-hop group Naughty by Nature was popularizing the term O.P.P. in the early nineties, real estate investors were popularizing the term O.P.M., as in “other people’s money”.  Many investors and property companies got wiped out in the early nineties as a result of not heeding to this phrase, putting their personal net worth on the line for deals that went south in a hurry.  As a result, those left standing decided against betting heavily on a given project with their own personal capital, using other people’s money, namely investors to fund projects, and protecting themselves by using the guarantees of their funds and LLC’s, rather than their own balance sheets. One guy didn’t learn that lesson, and he may pay dearly for it. Read the rest of this entry »

About a year ago we dedicated an entire week’s worth of posts to famed Analyst Meredith Whitney. As a quick refresher, she was responsible for “the call” on Citi, where she (almost prophetically) predicted that Citi was in serious trouble. Following a quick rise to fame, she was subsequently dubbed the “Oracle of Wall Street.” She left her job at Oppenheimer and started her own advisory firm: Meredith Whitney Advisory Group, LLC (rolls off the tongue, no?). She even made Forbes.com’s Best Analysts: Stock Pickers list. Her new advice: avoid anything related to the financial industry. Read the rest of this entry »

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. Read the rest of this entry »

We’ve been writing about it for months, so I’ll not have any sympathy for those caught off guard by recent headlines regarding the US Yield Curve. As this chart from the New York Times shows, 2009 was the year of curve steepening. With the Fed printing money like mad to keep over night fed target rates low, it’s been up to the back end of the curve to do all the moving. The question, of course, is why? And, why do we, the commercial real estate market, care? Read the rest of this entry »

In this interview with Philip Blumberg, he prognosticates precisely the grim future that awaits commercial real estate and the two paths we can take. Either way, more pain seems unavoidable.