Commercial Real Estate Finance

Posts Tagged ‘Wall Street Journal’

Here’s the logic behind REITs, as far as I understand them: while conforming to the government’s regulations for pass-through entities, investors pool massive amounts of capital to acquire and profit from large amounts of real estate, controlling portfolios well beyond the reach of smaller investment vehicles.

Or, to put it even more simply, the logic behind REITs is this: they’re big.

Holding fast to the idea that a REIT’s success is in pretty much direct proportion to its size, I was surprised to read this report on REITs’ activity in the recently completed first quarter. As the Wall Street Journal explains, the big winners in terms of revenue (which is generally how “winning” is decided in such things) were not the usual REIT behemoths (Simon Property Group (SPG), General Growth Properties (GGP) , etc.). Rather, the Dow Jones All-REIT Index shows the highest returns came from the “smaller” REITs:  Read the rest of this entry »

In today’s often-desperate economic climate, incidents of corruption often appear to be the norm. This reality, coupled with the multitude of perceptions investors hold toward value, often lands the market in a very narrow gray area between greed and risk.

Valuing an asset or portfolio for an owner can be quite different  from underwriting an asset or portfolio for a lender. Everyone has his own conception of value, limited timeline and risk threshold.    Read the rest of this entry »

The New York Times recently discussed some regulation changes coming out of the SEC. The revisions, mandated by the Dodd-Frank Act, seek to protect investors from the dangers of high-yield, high-risk investments. The regulations are being redesigned to provide more information for potential investors–a positive outcome, it seems–but the rules will also curtail who is “accredited” (deemed competent enough to make such risky investments).

As the New York Times article points out,

…it has broader implications. Should the United States government be deciding what people can do with their money? And how do you define who is wealthy enough — and smart enough — to invest in these offerings?

Private placements, exclusive investment opportunities not offered to the general public, are a significant part of the economy–and a major reason the world of investment and finance can’t be simplified to a few numbers from the stock market. The SEC’s way of “accrediting” investors for private placements consists of measuring investors’ income and net worth. If a person makes over $200k per year, they’re deemed competent for such private, high-risk investment.

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The Wall Street Journal recently reported that private equity giant Blackstone (NYSE: BX) is preparing to buy an approximately $800 million portfolio of 16 office buildings from a Morgan Stanley real estate fund. The article goes on to say:

The acquisition would be the latest sign of the big bet Blackstone is making on commercial property at a time of growing unease about the global economy. While many investors have stuck to the sidelines, Blackstone’s funds have been buying up highly-leveraged properties that crumbled in value when the market collapsed.

While others see this economic uncertainty as a time to fall back, to sit on their capital for fear that any investment–especially a portfolio as distressed as this–would be a bad one, Blackstone continues doing business as if there’s no recession to speak of. Read the rest of this entry »

For years now, the U.S. economy has seen an ongoing struggle between traditional retail stores and their nimbler, lower-overhead online counterparts. Last week, retail property giant Simon Properties (NYSE: SPG) made news by suing the state of Indiana over a dispute with its rivals—or, more accurately, it’s tenants’ rivals–Amazon.com (NASDAQ: AMZN). SPG is seeking, as they put it, greater fairness to taxpayers (in particular, the offline retailers who do pay taxes to the state.)

It is certainly unfair that Amazon, which does millions of dollars of business in the state of Indiana, is avoiding the taxes that Simon Properties and its retail tenants must pay. This legal move will likely prove another important chapter in the ongoing debate over how or if to tax an Internet retailer, which has become a pretty sticky issue. Typically, whether or not to tax is determined by an online retailer’s physical presence in a particular state. Read the rest of this entry »

Have you ever been told to buy in bulk? If not, I’m sure that you have at least heard the saying at some point in your life. Buying in bulk can be a great way to cut costs, especially if you are able to move your inventory quickly. Of course, Toyota, and other lean management professionals cringe at the thought of “bulk” in any sense, but no one can deny that is lowers costs. Sam’s Club and Costco are perfect examples for the every day consumer.

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You know that old adage, “you can’t have your cake and eat it too?” Well, when it comes to historic preservation in cities this is very much the case. It is hard to preserve an area of a city and still expect that area to have a booming economy without any development.

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The title is not quite the Shakespearean quote that will be forever famous, but it’s definitely appropriate for the current economic climate. Large pension funds are beginning to become wary of a second bubble in the commercial real estate market, a double dip of terrible.

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No, the title is not meant to suggest that I’m making a case against LegalZoom. In fact, despite the urge to act out of self-interest (which believe me, is difficult to do), I find myself supporting LegalZoom’s position. For those who are unclear on exactly what I’m talking about, let me take a couple steps back.

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