Real Insight. Real Estate.

Posts Tagged ‘Wall Street Journal’

Maybe the Mortgage Bankers Association (MBA) needs to get an M.B.A. in real estate. As a recent Wall Street Journal article detailed, the company charged with helping borrowers source financing, drank their own financing Kool-Aid and succumbed to a tanking economy and real estate market.  Its one thing for an unknowing and unsuspecting homeowner to get a variable rate mortgage.  Its another for an organization of professionals taught to understand the pitfalls of such financing in an economy with unsustainable low interest rates.  The MBA sold their Washington D.C. headquarters, which they bough in 2007 for $79.1 million,  to commercial real estate data provider CoStar Group for just $43 million.

Rather than writing a blog post, I figured I would simply make the following comments, and let you, the reader respond with your own: Read the rest of this entry »

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For the Week of February 6-12

- Will small U.S. banks have to start curtailing lending?

- Fannie and Freddie are set to purchase $200 billion in delinquent home loans.

- Multifamily REIT CEOs expect improvement in fundamentals in 2010 and a generally positive year.

- Mall landlords are expecting a much better 2010 according to WSJ online.

- An aquarium development deal in Times Square?
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The Week of January 31 - February 6

- Are real estate executives gaining confidence in the general market?

- Obama’s budget has hazy implications for commercial real estate.

- Former Security Capital Execs Plan REIT IPO.

- Despite the scare, Fannie Mae still funded over 80% of its loan originations last year with its MBS program.

- Will an infusion of TARP money into small banks result in productive lending to small businesses and real estate?
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The Week of January 24-30

- Will 2010 set the record for commercial loan defaults?

- Stuyvesant Town and Peter Cooper Village got handed over to creditors.

- Obama was centrally focused on job creation in his first State of the Union Address with little talk of real estate markets.

- The Fed decided to go forward with a plan to end it $1.25 trillion program of mortgage-debt purchases in March.

- Did dealmakers get stuck on the issue of who will negotiate tenant rental concessions at Peter Cooper Village and Stuyvesant Town?
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Last week, the Wall Street Journal published an article citing a survey of 47 economists, the majority of whom said the recession is over and the economy had bottomed out. But the question remains: what does that mean?

Several key indicators must be examined in even considering whether or not a recession has ended. However, for the 247,000 additional people who lost their jobs in July, it seems more likely one could first find the bottom of a bottomless pit. This leads us to one indicator: unemployment. While the July unemployment rate dropped 10 basis points from 9.5% to 9.4%, this was due partially to a decrease in the labor force itself, as a greater number of workers have become so fed up with the job market they stopped looking for work entirely. Since then, the first two weeks of August have seen over one million Americans file for unemployment benefits. Read the rest of this entry »

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It’s every investor’s dream — buy into an asset class on the rise before any one else has caught on. . . ride it all the way up until it gets bubbly. . . and then sell it to suckers.

Whether it was buying houses in 2004 (as we did), only to sell and go short in 2007 (as we did). . . or tech stocks in the late 1990’s only to see their cataclysmic fall in 2001, we are all too familiar with the term “bubble” in recent years.  In short, “bubble” is loosely defined as an unstable boom based on speculation in stocks, often followed by a financial crash.

We’ve seen it happen in Treasuries, financials, commercial real estate, autos, and credit. We watched in tortured silence, as an over-extended housing bubble popped, triggering a seismic credit meltdown.

And now, unbeknownst to many, as we deal with banking and housing issues, there are two more bubbles that could pop. . . and soon. Read the rest of this entry »

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Real Questions…

…. and Unintended Consequences

Question 1:

If you are a buyer of real estate (and actually have capital), what sort of IRR are you looking for? 20%? 30%?

Question 2:

If you are an owner of real estate, why on earth would you sell into this market unless you absolutely had to?

These questions succinctly sum up the entire commercial real estate market. Other statements examine facets of the problem, but they all revolve around this problem we’ll call, “The Bid/Offer Spread”.

Every day, the fund managers who still have jobs wake up, read the Wall Street Journal and say to themselves, “If I’m going to buy a property, I deserve a discount.” Any possible ‘green shoots’ notwithstanding, unemployment is high, the economy is in recession, global icons are getting destroyed (or taken over by the government), and the banking system as a whole is only viable because the Feds have stepped in with HUGE assistance programs. You can also throw in the fact that recent liquid market action (rally in gold, commodities and TIPS while the 10yr notes sells off ) is telling us we might even have an inflation problem in the not-so-distant future. Read the rest of this entry »

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