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January 2012

 

January 23, 2012 – A commercial mortgage banker recently told me that during the Long Term Capital Management crisis of 1998, he torpedoed six financing commitments for pending acquisitions. Do you care to guess which six erstwhile buyers during the LTCM crisis failed to close… Read >

 

January 18, 2012 – What a bracing tonic for me to hear stock market strategist David Rosenberg talking about “SIRP – Safety and Income at Reasonable Prices.” Similarly, the doting mallards at Goldman Sachs are quacking “LOL DG - “Low Operating Leverage and Dividend Growth.” Read >

 

January 14, 2012 – Occasionally we find a delectable property that is owned, alas, in a C- Corporation by some unfortunate chaps. C-Corps that have real estate operations as the primary line of business face significant tax issues when liquidating assets. Read >

Blue Ribbon Article

January 10, 2012 – We have a conundrum in asking whether the commercial real estate industry leaders who embarrassingly lost fortunes of other-people’s money were simple fools entranced by “group think” or, rather, malicious facilitators of an investment bubble in pursuit of individual fortunes. Read >

 

January 5, 2012 – The media had numerous reports of asset bubbles during the technology and real estate booms. Yet, twice in ten years the brains of Wall Street lost oodles of other people’s money. Read >


  December 2011
Blue Ribbon Article

December 29, 2011 – While against Fannie’s Richard Mudd and Freddie’s Richard Syron are ruthlessly fed to the lions to appease the angry mob, it is doubtful that they are convicted of any securities related crimes. Rather, their crimes were being “stupidly good”…. Read >

Blue Ribbon Article

December 23, 2011 – During asset bubbles, herding behavior is often done unwittingly.  It’s the same people sharing the same ideas, all drinking the Kool-Aid together. The rub is in predicting where and when the crisis will occur.  Read >

 

December 20, 2011 – Easy target acquisition in commercial real estate remains, like the Canadian Goose in the Delaware marshlands, wholly expected but not yet arrived.  Read >

Blue Ribbon Article

December 15, 2011 - I was reminded about fighting the last war recently when a top commercial real estate broker with several Ivy League degrees said that investors are primarily interested in value-add opportunities. A perfectly nice statement of course, one that elicits nodding heads all around the conference room table, until the one lad asks how… Read >

Blue Ribbon Article

December 11, 2011 –  When Scrooge is visited by Jacob Marley’s ghost in Charles Dickens’ A Christmas Carol, Scrooge initially doubts that he is seeing a ghost, blaming the apparition on bad digestion. Scrooge says, “There’s more gravy about you than grave, whatever you are.”    Read >

 

December 8, 2011 - While as the middle child I strive to differentiate myself, I never resort to joining fads like planking, Tebowing, and buying pricey properties in New York City.. Read >

 

December 1, 2011 - It’s a puzzling piece of history that nary a leader of the Wall Street real estate industry during the 2006 to 2007 bubble was tarred, feathered and ridden on a rail.  Read >


  November 2011
 

November 25, 2011 -  Breakfast of yore, when Financial Markets were giddy and always upbeat, was a rejuvenating moment as you ate a scone and read about the oodles of money pouring down on just about every merry soul.  Read >

 

November 22, 2011 – There is nothing wrong with our American economy that cannot be solved with population growth coupled with reduced government spending. Read >

  November 17, 2011 – The “smart” MBA money knows that assets are priced based on the present value of future cash flows discounted at an appropriate risk premium. There is no mention in real estate finance textbooks of adding a premium for irrational exuberance or too much money chasing too few deals. Read >

 

November 15, 2011 – Why are many sellers of assets in denial about today’s lower valuations? The Moodys/REAL Index, which is based on actual sales transactions valued at $2.5 million and above, fell over 40% and continues to bounce along the bottom.  Read >

 

November 9, 2011 - Cash flow growth is a key determinant of your projected returns. Forecasting cash flow growth is a highly problematic, albeit essential, component of valuing a property.  Digressing into academia for a moment, the Gordon Growth Model (GGM) is a variant of the discounted cash flow model. Read >

 

November 5, 2011 - BlackRock issued a wonkish research report that had the following statement about the 2005-2007 commercial real estate bubble: “…this cycle was first and foremost the result of unprecedented capital market forces.”  Wow!  Not to be that guy, but does anyone else think…  Read >

Blue Ribbon Article

November 3, 2011 - The reality of the capital markets is that banks may fail or withdraw financing even after a commitment is issued. Not to be that guy, but if the seller agreed to financing contingency, why should the buyer risk a costly litigation battle. Read >

 
  October 2011
Blue Ribbon Article

October 31, 2011 - Years from now, we’ll be telling our grandchildren about Halloween 2011 and the gruesome tale of the Euro Debt Crisis. Imagine their nightmares about zombie politicians trying to contain the walking dead in Greece, at the risk of losing Italy and Spain to the space-borne virus. Read >

  October 25, 2011 – Economists of all stripes agree that a long sustained period of inflation is caused by money supply growing faster than the rate of economic growth.  Given QE2, the unfathomable amount of U.S. government debt, and lack of job growth, how, one might ask, can we not anticipate runaway inflation in the United States?  Read >
Blue Ribbon Article October 21, 2011 – How to Outrun a Grizzly Bear! Commercial real estate investment, though risky at times, is still better than a lot of choices out there. Read >
 

October 20, 2011 – An interview with GlobeSt.Com’s John Salustri, in which Dan Pryor says growth doesn’t happen until the global balance sheet problem is resolved:  View >

 

October 18, 2011 - As commercial real estate investors, we need to anticipate that sovereign debt issues in Europe, the United States, and Japan coupled with American consumer, student loan, bank, CMBS, and mortgage debt may result in a Lehmanesqe financial crisis.  Read >

Blue Ribbon Article

October 11, 2011 - In this period of economic uncertainty, it may make sense to be aggressive on your pricing for in-place leases to quality tenants, and extremely cautious about the prospects of leasing vacant space. Read >

 

October 5, 2011 - Have you noticed the tremendous bifurcation in asset valuations between the REITS and the broad commercial real estate market? Read >


  September 2011
 

September 29, 2011 - The predominant concern for commercial real estate investors in regards to exit strategy is the downside. Ask yourself what would negatively impact the valuation of the asset during the anticipated hold period?  Read >

Blue Ribbon Article

September 21, 2011 - Properly motivating employees to increase net operating income can have a tremendous impact on the valuation of the property. We often utilize a unique profit share plan that creates strong incentives for increasing cash flow while guarding against ploys that “game the system.” The program’s ability to boost NOI makes it particularly advantageous during the 12 to 24 months leading up to asset sale.  Read >

 

September 19, 2011 - Forget the Wall Street herd clamoring to buy multifamily assets in select cities at cap rates below 5%.  Read >

 

September 14, 2011 - Being aggressive with an early move on the office asset class, but paying very low valuations, creates a solid defensive play for the days forthcoming when cap rates are increasing.  Read >

  September 13, 2011 - If you want to know “why movies suck,” read the new book, “Writing Movies for Fun and Profit.” Top 2 reasons why: 1) Too much money chasing too few deals; & 2) Herd Mentality. Wait, that reminds me of commercial real estate investing... Read >
  September 6, 2011 - Are you troubled by the current spate of multifamily transactions with cap rates in the 4s and 5s? The rationale for buying multifamily housing is compelling, but not at a cap rate that jeopardizes your investment and exit valuations. As Warren Buffet says, “…be fearful when others are greedy, and greedy when others are fearful.” Read >
 
 

August 2011

  August 24, 2011 - Who remembers the cult classic “Escape from New York” involving the character Snake Plissken escaping the maximum security prison known as Manhattan and populated by “the crazies.” Now I am not saying it’s the same thing, but… a friend recently sold his portfolio of run-of-the-mill “B” apartment buildings located in Queens, NY at a 4.25% capitalization rate and laughed all the way to the bank. Read >
  August 18, 2011 - The stampeding herd of CRE investors during the bubble included the “smartest” Blue Chip Funds in the industry happily back slapping each other and sharing the same delusional beliefs. Why didn’t we see media “lynchings” of CRE industry leaders during the Great Recession? Read >
Blue Ribbon Article August 14, 2011 - Political guru James Carville said: “I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.” Indeed, the U.S bond market’s appeal last week to global investors in face of sovereign debt crises in Europe, collapsing public equity markets, S&P’s antics, and disappointing financial news clearly demonstrated fierceness reminiscent of Hulk Hogan. What’s the impact on commercial real estate?  Read >
Blue Ribbon Article August 10, 2011 - Prior to trash talking government bonds last week, Standard & Poor’s shockingly announced that its CMBS rating model had a major bust. Many of us who still carry scars from our days as analysts and associates in I-banking were bemused by the admission and wondered why no one was sacked. The news caused spasms in the CMBS industry with one participant forecasting a “potential 20% decline in total deal volume for the remainder of the year.” Read >
Blue Ribbon Article August 6, 2011 - Oscar Wilde, who penned the adage, “It's not whether you win or lose, it's how you place the blame,” would have fully enjoyed the clever response of U.S. Government officials to a (then) pending Standard & Poor’s downgrade of U.S. Treasury debt.  Recognizing S&P’s growing reputation for busts in financial modeling, Treasury Department flacks said they “noticed a $2 trillion error in S&P’s math.  What does the downgrade mean to your real estate investment strategy?  Read >
  August 3, 2011 - Major investment opportunities in office assets currently exist in the nation’s leading secondary cities where there is little transaction volume or buyer’s appetite. Target secondary cities that have one or more of the following attributes: Read >
  August 2, 2011 - While population growth was the key indicator for real estate appreciation during the 2000 to 2007 period, it may be less of a barometer for your investment strategy currently. Rather, your thinking should be more focused on economic growth drivers such as investments in technology, and biotech. Read >
 

August 1, 2011 - Has anyone noticed that Canada faced economic collapse in the mid 1990s and now is a model of economic strength?  The United States has imploded and emerged from the ashes previously, and will do so again.  We just need the leaders who can make the change happen. Read >

 
 

June 2011

 

June 5, 2011 – An interview with Ian Ritter of GlobeSt.Com, in which  Dan Pryor explains that his writing for GlobeSt.com will be directed toward the decision makers in the industry. Other things discussed in the video are: View >

  June 5, 2011 – Odessa was one of the early voices exclaiming concern about the debt crises in America and in Europe. As Dan Pryor tells Ian Ritter, the top issues likely to derail the economic recovery are federal debt (including Europe) and the moribund consumer. Read >
  June 5, 2011 – Will Crisis in U.S. Debt Levels Drive Higher Interest Rates? Read >
 

May 2011

Blue Ribbon Article May 28, 2011 – Does European Debt Contagion Affect You? Read >