Real Insight. Real Estate.

Posts Tagged ‘Rishy Mehrotra’

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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Gretchen Morgenson, columnist for the NY Times wrote an article the other day referencing Tishman Speyer and BlackRock’s default on Stuyvesant Town and Peter Cooper Village.  Her point is essentially that Tishman Speyer and BlackRock were not the only investors who took advantage of credit in ’06 and ’07 to make the numbers work on multi-family properties.  Many smaller players had a similar strategy in which they would make highly leveraged acquisitions and ratchet up rents aggressively not only to meet debt obligations but achieve stellar equity returns as well.  Morgenson draws attention to Vantage Properties, an owner of 9,500 rental units in NYC whose strategy has been to acquire rent controlled apartments and ratchet up rents quicker than scheduled to achieve the returns required by Vantage and its equity partner Area Property.  Vantage began to operate in an ethical “gray area” to carry out this strategy.  Will lawsuits and foreclosures in a depressed CRE market trigger the ethical conscience of owners? Read the rest of this entry »

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Half way through 2009, we posted a list published by CNBC.com of the largest bank failures we had seen to that point.  I thought we’d revisit this topic since the second half of ’09 proved to be even worse.  To put things in perspective, consider this: Silverton Bank, which was the second largest failure on CNBC’s list in July just barely made their new version of the list at #10.  8 of the 10 banks on this list went under in the second half of ’09.

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I recently read about NYU’s purchase of the Forbes building at Fifth Avenue and 12th st. in NYC.  As an NYU grad, I’m well aware of the University’s proclivity for buying prime real estate with income derived from obscenely high tuitions.  In hearing about the University’s new buy, two thoughts immediately crept into my mind: 1) Why was I such an idiot for paying such a ridiculously high tuition, and 2) Doesn’t it seem like universities are the best buyers of real estate in the current climate?  Few people probably care about my personal foibles, so I will not dwell on the first thought.  But in a commercial real estate market where everyone is wondering where momentum will come from, the second thought deserves further consideration.

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This video features Nariman Behravesh delivering what he believes to be the most important economic trends in the coming year.  Behravesh is the Chief Economist at IHS Global Insight, a finance and economics analytics and consultancy firm.

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Regardless of whether your political inclinations bear to the left or right, chances are that as an American you’ve become weary of government “bailouts.”  There’s something about the federal government meddling in free markets that is very “un-American.”  We scoff at the Chinese and call them “currency manipulators” when their government artificially holds down the value of the Yuan.  Both the Executive and Legislative branches of the U.S. Government have made requests to China to eliminate the peg.  But when we’re faced with similar circumstances in the U.S., do our officials step up to the plate and lobby for minimal government intervention?  No they don’t—And the best example right now is Fannie and Freddie.

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Local governments are using every lure they can to attract businesses to their areas and corporations are taking full advantage of it.  This article from The Wall Street Journal cites the example of Starwood Hotels & Resorts’ plans to move their headquarters from White Plains, NY to Stamford, CT.  Starwood doesn’t have any reason to go through the pains of relocating, so the incentives they are getting from the State of Connecticut must be pretty sweet to get them to move.  But is it a good idea for local governments to be spending tax revenue on creating incentives to attract major businesses?  Sure, having a new major employer in town will bolster the local economy, but at what point is the city or state going overboard with incentives?

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The Real Deal online magazine published an article a few weeks ago about the success of gourmet food trucks in New York City.  Having lived in NYC for a number of years, I can attest to the popularity of these trucks and carts.  Sure, the majority of street vendors sell garbage, but there are a number of them that sell high quality product that would be a huge hit in a traditional brick and mortar retail location.  In fact, there have been several stories of entrepreneurs who have started a food business out of a truck and soon opened brick and mortar restaurants with huge success.  In a suffering economy, would it make sense for non-food retailers to take a stab at  trying the same strategy?

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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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Fortune’s list of the 1,000 largest companies included 9 real estate centric companies this year.  The list, which ranks companies by the size of their revenue from the previous year,  was published in the summer.  It will be interesting to see which of these companies stays on the list for 2010.  We decided to put ourselves in the top spot since there were only 9 real estate companies in the Fortune 1,000.  With the way things are going, maybe all of these companies will dissolve and we really will be in the top spot…

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