10 October 2008
“Show me the money” is Cuba Gooding’s mantra in the movie “Jerry McGuire.” But while big numbers are being thrown around by governments worldwide, trying to avoid a total meltdown (is las vegas taking odds on that?) there continues to be real losses accumulating in the real estate industry. So, it seems like now it the time to start pulling the trigger on distressed deals. But then again maybe not. If values continue to fall, then maybe waiting is smarter. That’s why the people making these investment decisions both get paid the big bucks and have sleepless nights. We are clearly in a meltdown and this one has nothing to do with global warming. Unlike the U.S. in the early 1990’s when we were watching to see what bank the RTC took over, today we’re waking up wondering what country is going to take things into their own hands, trying desperately to keep some semblance of confidence in their banking sector. These are and will continue to be trying times but for those who have only seen the real estate boom, it’s both sobering and instructional. For those of us that have been through at least one, and for me and some of my friends at least three real estate cycles, we know about uncertain times. But I don’t think that any of us really knows exactly what to expect today or next Monday. What is looking pretty certain is that cash will continue to be king and there will be buying opportunities where there is seller stress. I use the term stress rather than distress because many of the assets that will be bought (or refinanced privately) will be healthy assets caught in the wringer of the evaporation of the bountiful capital that existed. Maybe this year we in America will have a lot more to be thankful for at Thanksgiving than material things and hopefully one of them will be that America made the right choice to elect a president that can inspire us to a brighter future.
The fall season is beautiful in the northeast this year although a little warmer than ‘normal’ (whatever normal is anymore). my coordinates these days have me living part-time in an apartment in long beach, on the long island shore not far from JFK. Most mornings, I walk down the boardwalk, which even though is a couple of blocks out of the way, and can hear the sound of waves crashing on the shoreline. While sometimes I’m walking in the dark, the smell and sound are still fabulous. On the weekends, I take walks on the beach, looking for that one ultimate seashell to take back with me (haven’t found it yet) and watching the hundreds of surfers who are magnetically pulled to this beach. I’ve never surfed and am not sure I need to (haven’t skydived or downhilled skied either). But I’ve noticed the patience that is necessary in this part of the atlantic ocean as the one good wave may come only once in eight. One of the discoveries I’ve made in the few weeks I’ve been living there is that the beach club, silverpoint, where my family had a small cabana is still there. The gates have been closed but one day I’m going to drive in to see, if possibly, after all these year, anything recognizable remains. I have photos and movies that have been passed down to me showing the adults playing bridge and canasta; of the men playing softball in the sand; of birthday parties (mine is in july) and bbq’s and people looking very happy. My grandfather taught me how to swim there, in the ocean (as a young man he was a lifeguard who once saved someone from drowning) and I also learned to play baseball there from my father and my uncles, all who were fairly good athletes. Things were so much simpler then. My father use to let me and my brother sit on his lap and steer the car as we left the parking lot for home after a long weekend day at the beach. Where I grew up, in forest hills, ny, is also on my list to visit, probably next weekend. I was there about five years ago and the buildings are pretty much the same, I think just the makeup of the people has changed. We can never go back, except to visit, but, sometimes in a quiet time, I think of those days, reminded recently by a facebook website group of my former junior high school where people were testing each others’ memories of teachers. I think about how lucky I was to grow up until age 15 in new york and then move to the suburbs in new jersey which while only 22 miles west of midtown manhattan could have been somewhere in the heartland as it’s become to be referred to. And, as I write this, early on Friday morning, knowing that tonight I will be playing the piano at my former band mate tom davis’ memorial service, I stop, just for a moment, because that’s all it takes, and smile and know that even with what is going on in the global financial world, and no matter how much my investments have dropped in the past months (btw, more than 20%) I have my health; I have a loving wife and children who are happy and healthy and doing things that they love. When things get tough, sometimes we get more sentimental; I used to be that way too. But in the last few years, I have become more and more grateful, every day of the joy of life and my good fortune to have had a chance to do and see so many things and meet so many people and…..well, I could go on and on but one of my friends who reads this column has suggested that I try to keep it shorter (it’s a little shorter paul) and so i’ll end with this:
“Your best shot at happiness, self-worth and personal satisfaction-the things that constitute real success-is not in earning as much as you can but in performing as well as you can something that you consider worthwhile.”
Where I’ll Be:
Week of October 13: New York
Week of October 20: New York
October 23: New York Athletic Club: The MacDella Cooper Foundation Gala to raise money to help needy children in Liberia
October 27-30: Miami Beach for the ULI Fall Meeting.
Nov. 12-13: New York to moderate a panel at the PERE Forum.
Dec. 8-12: London for meetings and especially to moderate a panel at the Reuters Real Estate Global Property Outlook 2009 on the 9th (Invitation only).
Feb. 19-20, 2009: Chapel Hill, NC to attend the Kenan-Flagler Center for Real Estate Development’s Annual Conference and Real Estate Challenge Case Competition.
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