The U.S. Presidential election on November 4 will be the most significant of my adult life. The world is watching us so hopefully there will be no election shenanigans this time around. I offer this piece from today's NY Times for your consideration First, let's make sure everyone gets out to vote."Does anybody really know what time it is?" This line from a song by the band 'Chicago' may simply describe what we're all experiencing these days. In conversations this week I have not been surprised that while business to some degree goes on as usual, the transaction business, buying and selling investment grade real estate has slowed to a snail's pace. And, while people who have gone through previous cycles think that the troubled assets (vs. loans) will start surfacing in early 2009, no one seems exactly certain. However, there definitely seems to be a movement towards getting ready for an expected deluge of troubled assets to become available. But, with the U.S. government's plan to prop up the banking system still not executed it seems somewhat uncertain as to how this whole thing will play out. Suffice it to say that there is money ready and smart, experienced opportunistic real estate players out there who can pull the trigger pretty quickly (p.s. this won't be hedge funds will it?)
Another interesting point is the amount of interest in Real Capital Analytics' (RCA) new Global Trends Report (GTR) but it's not surprising that institutional investors in more and more numbers are looking outside the U.S. to deploy their allocations. BTW, RCA is offering a free trial to their GTR on their website http://www.rcanalytics.com.
This is a photo of my friend and former bandmate, Professor Tom Davis. Thank you all who wrote to me with condolences about Tom; I really appreciated it. Tom was a professor of philosophy and religion at SUNY (State University of New York)'s Ulster County Campus (about 90 minutes north of Manhattan). He was loved and respected by his students, many of whom have said that Tom changed their lives. His sudden death has shocked the campus, his family and his friends (one of whom wrote me after Googling and finding this column). The band that Tom and I played in, "Everyone" is working on doing a concert at the school to raise money for the scholarship fund created in Tom's name. It's the least we can do to celebrate Tom's life.
At least two industry conferences have been cancelled between now and the end of the year. Clearly people are cutting back on expenses, travel included. The U.S. is in bad shape in general and something needs to happen to turn the tide. Hopefully, whoever our next President is will inspire the confidence needed for the population in general to keep the system going. But, it's not an easy task, nor a quick fix. And, just as I don't know what my house in Napa, CA is worth, valuations of assets is a roadblock to deals (assuming equity and debt exist, which I continue to believe they do albeit changed due to current underwriting standards). I'm told that the real estate derivatives market in the U.S. has heated up and that one of the major players had their best trading month in September.
So, whose crystal ball can predict where and when we'll hit bottom?
P.S. I've been writing pieces for PERE (Private Equity Real Estate). You can sign-up free for access to their stories on our industry.
P.P.S. If you find this blog worthwhile, please pass along this link where people can sign up to receive it. Thanks.
Where I'll be:
October 23: New York Athletic Club: The MacDella Cooper Foundation Gala to raise money to help needy children in Liberia.
Oct. 27-30: Miami Beach for the ULI Fall Meeting.
Oct. 30-Nov.2: Montreal
Nov. 3-7: New York
Nov. 12-13: New York to moderate a panel at the PERE Forum (there's a special "FOS" (Friends of Steve) discount available. Please contact me for details.
Nov. 18-19: Amsterdam for INREV's Investor Platform and Committee Meetings
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.
Copyright Steve Felix 2008
