Friday, May 21, 2010

Bouncing along on the road

Anybody know where this beautiful building is located?

I used to think I was the last to know about many things but over the years have learned that while I'm not necessarily the first, I'm also not the last.  Case in point:  This week I was introduced to the Green Building Finance Consortium (GBFC).  It's a research and education initiative founded in 2006 by industry veteran, Scott Muldavin, to assist private sector investors underwrite sustainable property investments from a financial perspective.  In checking out their site I also learned that a few other industry friends are involved with GBFC.  I think their mission, to help fill the void of information, methods, and practices for the valuation and underwriting of sustainable properties, is not only commendable, it's important for the future of our industry.  And, admirably, given the critical importance of independence, GBFC has also chosen to not accept membership or financial support from green product or green building trade organizations, and limits the individual investments of any organization in the Consortium’s work. GBFC does accept support from a select group of governments, non-governmental organizations, and real estate industry companies actively involved in energy efficiency and sustainability investment.  Sustaining members include PREA, Principal Real Estate Investors, RealFoundations and ULI.   GBFC has recently published a book "Value Beyond Cost Savings" which can be purchased on their website.  But more than that, please take a look and see if you don't feel that GBFC is something you'd like to bring to the attention of your company (I'm doing the same).  Thanks.

My brother is visiting me in New York this weekend and even though we both grew up in Forest Hills, he moved away many years ago and hasn't been back in quite a while.  Walking around the city today, it was interesting how much he noticed about buildings, etc., things that I've just taken for granted, even as observant as I believe I am.  In wide-eyed amazement, we made our way through Times Square which was literally teeming with tourists on what may be the most beautiful day so far this spring.  Hanging out with him is reminding me that keeping your eyes open, no matter where you are, will allow you to absorb sites and experiences that will make an indelible impression on the film of your mind.

Apropos of some of the comments in the Hodes/Weill white paper I excerpted last week are these from RCA's Month in Review report which was published yesterday:  While the gap in price expectations has narrowed somewhat, there is now a misalignment of the types of properties buyers want versus what sellers have chosen – or been forced – to offer for sale. Sellers are keeping most distressed assets from the market, and few are willing to part with their better assets. So far, bank lenders have taken a similar approach.  The latest Moody's/REAL CPPI also reflects a market bouncing sideways along a pricing bottom, as well as mixed signals for each of the property types.  Even the anemic pace and pricing of distressed-asset sales continue to weigh on the market. The near-term negatives do not suggest a renewed downturn, but rather indicate that the robust pricing some trophy assets are commanding has not broken through to the broader market.

In addition to there being so much pent-up capital, yearning to make deals, we're part of an industry which has a pent-up need for good things to start happening.  And yet, things are going to move along at their own pace and not any faster.  I see positive things happening in terms of attitude of institutional investors to be more seriously considering allocating money to real estate again.  While a lot of interest is in core and debt (in all shapes and sizes), other strategies are starting to get some traction as investors and consultants recognize that windows of opportunity with some strategies will be open only for so long. 

These are my views and not that of my employer. 

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