MIPIM (2)

Many of you have asked me to either eliminate or reduce the use of links in this column. I forgot that in my last post and have copied the excellent article about the MIPIM Summit which appears on the website of Real Estate Publishers and was written by REP Senior Editor Bernd Struben. The exclusive event drew a full house of top investors from around the world. The interactive format between the panel and the invitation-only audience was kept on track by moderators Steve Felix, Head of Real Estate Client Relations-North America, Aviva Investors, and Janice Stanton, Senior Managing Director, Cushman & Wakefield. The panel comprised Peter Reilly, Managing Director, JP Morgan Asset Management, Hans op ‘t Veld, Head of Real Estate, PGGM, Joe Valente, Head of Portfolio Management, Allianz Real Estate GmbH, and Dietrich Heidtmann, Managing Director, Morgan Stanley.

Does anybody really know what time it is? With the world economy sagging and real estate taking a big hit everyone is looking for advice. REP’s MIPIM Summit 2009 topics included: rebuilding confidence in the real estate industry; what the best plans are given the current market situation; the right price for risk; how to decide between debt and equity when the yield on debt can exceed that on equity; examining when the bottom will be reached; and asking if people think enough outside the box? When the audience of top industry executives was polled on when they expect the recovery to commence, no one raised their hand for 2009, most expected the first half of 2010, and about a quarter voted for the second half of 2010. When the audience was asked their expectations for the value loss from peak property prices in 2007 to the eventual trough the majority expected a loss of 30-50%, while none thought it would be less, and a few expected an even greater loss in values.

Peter Reilly, Managing Director, JP Morgan Asset Management. Peter Reilly, Managing Director, JP Morgan Asset Management: “Following the last two to three years of very aggressive growth we’re looking at a major change in the next few years. Operating in a no-growth environment the focus will be on individual properties and working closely with the tenant. In the near term the focus will return to trying to add value to the existing portfolio, and there will definitely be a switch back to mature markets and reducing risk throughout the portfolio. There is no pressure to invest today; we’re only making acquisitions selectively where they make very good sense. By and large investors have lost a huge amount of equity. Right now they are reluctant to commit until they are sure we have hit bottom. They prefer to wait until 3-6 months after we’ve hit bottom to reenter the market. Investors are shell shocked, in a cash defensive position. But in 2012-2014 inflation from all of the mounting government debt is going to kick in, so property will become very attractive. In the mean time a lot of debt needs to be restructured; a lot more needs to be done to bring confidence back in the system. It’s going to be back to the people who really know what they’re doing and can stick it out for a few years.”

Hans op ‘t Veld, Head of Real Estate, PGGM. Hans op ‘t Veld, Head of Real Estate, PGGM: “The REIT market has seen a wild ride over the last two years. The volatility is quite high. Right now there is a gap between the direct markets and the REIT markets, and the question is, whose pricing is right? We’re quite worried about the whole deleveraging process that’s going on. We’re more interested in well capitalized companies; capital has become quite expensive. In the last few years the game to play was yield compression. The question is, was that a sensible thing to do, particularly in the smaller markets with so much capital pouring in? On the investor side the UK, US, and Singapore have probably hit bottom in terms of sentiment. My concern is with continental Europe; I don’t think the acceptance is there yet. The realization is still to come that rents are going to be what they were. We’re adapting and learning a lot. Looking forward things look quite attractive. Inflation will be back, and we can get our hands on assets we really like. Trust is wonderful to have with investors, but evidence is even better. You’ll see more scrutiny in the future.”

Joe Valente, Head of Portfolio Management, Allianz Real Estate GmbH. Joe Valente, Head of Portfolio Management, Allianz Real Estate GmbH: “We have a mandate to grow over the next few years, but there is no pressure to buy immediately. Our overall strategy places a lot of focus on the core markets, but we are also interested in the distressed markets. The priorities are where you think the greatest opportunities are. There is no overall answer as to when the bottom will be reached. It will be different in different markets, different in London than in other cities. The big issue in our markets is the debt overhang, the debt rollover. This may make real estate lag behind the macro economic recovery; investors may ask for higher returns. We’re looking at five to 10 years to unravel the debt, but there are lots of opportunities. There’s an 8% yield in London, which looks great until you realize rents are going to fall 50%, so then you have a yield of 4%. And then you currently have a 5% yield in Bucharest, which just doesn’t make sense. For the first time in the entire cycle people are learning the value of fundamentals. It’s a great time to be an equity player. It’s about the asset; it’s about understanding the local market. Now is the time to talk to major players about grade-A assets, because those will be the first to go. The goal is finding the ideal combination of a distressed loan but not a distressed asset.”

Dietrich Heidtmann, Managing Director, Morgan Stanley. Dietrich Heidtmann, Managing Director, Morgan Stanley: “The reasons why people went into real estate in the first place are still valid. I haven’t met anyone who is reconsidering their involvement in real estate. But the benefits of having a globally diversified portfolio have been less clear in the last 24 months, so people have started to refocus on their home markets, a more domestic focus even though there are still great cross-border opportunities. Today investors with capital know the value of that capital. To be successful today in raising a fund you have to start with investor feedback and know what they’re looking for. The typical fund of ‘here, this is what we’re doing’ is not effective today. Communication is the key with today’s investors.”

Janice Stanton, Senior Managing Director, Cushman & Wakefield. Janice Stanton, Senior Managing Director, Cushman & Wakefield: “There is an interesting interplay between greed and fear in the markets. The US has lost 4 million jobs and vacancy rates will still go up. If you can hang in there and be selective, there are some incredible buying opportunities coming up in the next few years. We’re seeing the reemergence of local players. In smaller deals of under 25 million, certain people can do this entirely with equity; they’re seeing the yields and stepping in.”

Steve Felix, Head of Real Estate Client Relations-North America, Aviva Investors. Steve Felix, Head of Real Estate Client Relations-North America, Aviva Investors: “There are and will continue to be opportunities in the US, but capital has become more conservative than it has ever been. Experience is a premium. The past five years were actually extraordinary, but since they’re the recent past, we think of them as normal. It’s very important for senior people in General Partnerships to visit the investors. That makes the investors feel comfortable that you’re on the job and know what you’re doing, and people will pass this on.”

On the Road-At MIPIM

This week at MIPIM in Cannes started off with a beautiful full moon sitting low off the horizon of the Croisette (the main drag) and you knew it was going to be a good week. While too many people were hung up on exactly how many delegates attended MIPIM it was a huge success. My guess is that the number was between 18-20,000 which, given the economic circumstances we’re all dealing with shows that MIPIM is considered by many people in the broad commercial real estate industry to be a ‘must attend’ event. One of the glaring differences this year was the greatly reduced presence of the Russian cities and companies who in the last few years had become virtually omnipresent. In an informal poll I heard a number of people who had stands (booths) in the Palais say that it was a better show in that it allowed you to have real, substantive conversations with people and the quality of the delegate was of a higher level. This, to me anyway, is what a ‘trade show’ is all about and while, when you ‘open your door’ to anyone you run the risk of having to accommodate the random person coming up to you looking for financing for a luxury hotel to be built in East Jibib it’s just in a day’s work.

The MIPIM Summit TV show went off really well (and it’s not just my opinion) and my co-host, Janice Stanton of Cushman & Wakefield, Pete Reilly of JPMorgan, Dietrich Heidtmann of Morgan Stanley and Joe Valante of Allianz proved that transparency, honesty and respect (for one another) is the key to both a successful panel and to doing business. My appreciation also to my friend Marinus Dijkman of REP (Real Estate Publishers) who brought me into this opportunity and who was the coordinator of the event. Rose-Noelle Prichard of Reed Midem (MIPIM) and her team made this all possible and ‘first class.’ Selected video clips of the Summit will be available shortly; I’ll let you know. (You can read more take-away quotes from the MIPIM Summit on the REP website.

So, what was the sentiment this week? Clearly realistic but also realistically optimistic; at least from those who have been through other cycles. When I polled the MIPIM Summit group about when they feel we’ll ‘hit bottom’ globally (not an easy question given that each market is on it’s own clock), the strongest vote was for 1Q2010. But, one panelist said "make no mistake about it, there are great buying opportunities in markets such as London whose downturn occurred earlier". Debt is clearly the biggest question; when will it return and from what sources and what will it look like. And while, as one of our panelists said, “it’s interesting that we’ve spoken here for almost 90 minutes and no one has said the words “Sovereign Wealth Funds”, some feel that they will be come a real source of debt going forward. While we don’t know what ‘normal’ will look like when it appears it’s clear that the commercial real estate industry has gone back to the basics of sound asset/property management to increase cash flows from operations. So, good things do follow bad. But to sum it up, as I’ve written to you before, if you are now or aspire to be a player in the global commercial real estate industry, MIPIM is one event that you must attend each year.

This week I also got to meet a fellow who has been reading my column for years and we’ve occasionally emailed each other but had never met. This is when life is good. And, will all the stress of business, the drain of the worlds financial mess, the horror of more random murders by lunatic people in both the U.S. and Germany this week and the news that friends are ill, it behooves us to move forward, to keep on keeping on and to be kind to each other as, no matter where we’re from, we’re all in this together. There was much laughing this week at luncheons and dinners; there was much camaraderie, perhaps the feeling of being drawn together by adverse market conditions. But whatever it was it showed that more and more as people get to interact with others from countries and societies foreign to them, we learn more about each other and that, my friends, is what I believe will bring us closer to a truly global community. This week gave me even more hope of that promise.

Many years ago I adjusted my expectations, make that lowered them, about what I’d like to accomplish at any industry event. My approach has been that if I can come way with having met one person that I hadn’t known that is meaningful, the event was a success. This week I had that happen as I met and talked with a man and I know that we will stay in touch for a long time and become friends. (Note: My expectations are generally exceeded but I never expect them to be….that’s the beauty of it!).

Final thought. The suggestion to call this column “On the Road” was suggested by a former colleague who did not know that my favorite all-time book was Jack Kerouac’s “On the Road.” Recently, I bought “On the Road with Charles Kuralt” (a CBS News reporter). I just finished reading it. It’s a good read. But I want to share with you how the book ends. It’s about a tree alongside Highway 50 in Delta, Colorado: “Just looking at it (the tree) makes you think about how unexpected life on earth can be. The tree is so lonely and so brave that it seems to offer courage to those who pass it-and a message. It is the Christmas message: that there is life and hope even in a tough world.”

Photo: Survivor's Networking Breakfast at MIPIM this morning.

Where I'll be:

Mar.24: New York to moderate a panel at the iGlobal Forum Real Estate Private Equity Summit on the 24th.
Mar. 25-26: Washington DC to attend PREA's Spring Conference
Apr. 10: New York to see Umphrey’s McGee at the Nokia Theatre ( a great venue)
April 23-25: Athens, Greece for INREV’s Annual General Meeting and Conference
May 14-16: North Palm Beach, FL to attend the annual Homer Hoyt Institute and Weimer School sessions with some of the industry’s leading academics.

Note: Statistics I mentioned last week were from IREI’s VIP Conference.

P.S. For more commentary about MIPIM check CREOPoint




These are my personal views and not that of my employer.

On the Road (to MIPIM)

I thought you’d be interested in seeing a few audience response things from a very recent industry event (Note: Respondents are pension funds, endowments, foundations, consultants, managers and others):
1. How much will property values change in 2009?
a. Increase 1.7%: 2%
b. Decrease 4.2%: 9%
c. Decrease 8.3%: 24%
d. Decrease 12.4%: 34%
e. Decrease 16.9%: 31%

2. How will your real estate allocation in 2009 vary from 2008?
a. Increase: 27%
b. Decrease: 14%
c. Stay the same: 59%

3. At this moment (Feb, 08), I most want to be invested in:
a. U.S. Real Estate: 23%
b. Overseas real estate: 2%
c. Infrastructure: 6%
d. Cash: 26%
e. Debt: 37%
f. Gold bullion: 7%

4. As a plan sponsor, will your new commitments to real estate in 2009:
a. Increase: 8%
b. Decrease: 69%
c. Stay the same: 23%

So, while these responses represent only a sample of the sentiment of U.S. institutional investors they are interesting all the same. What I have found in talking directly with investors is that for many things are ‘month-to-month’ regarding their ability to invest new money in any strategy. However, there are a number of them who not only have new money to put into real estate but also are working their way to finding additional money to take advantage of opportunities that are becoming available given the circumstances in the market today. While some ‘pundits’ (which may or may not include economists, strategists, educators and some actual practitioners) suggest writing off 2009 completely I don’t think anything could be further from the truth (But, see next paragraph).

From the recent PERE Forum in Hong Kong, a friend reports:
My principal take-away from the conference is that investment managers in Asia are dead-in-the-water for 2009, and maybe into part of 2010. This is due to (a) lack of investment capacity among institutional investors (they would have to sell common securities at a depressed price in order to fund new real estate commitments); (b) lack of sufficient financing to make most opportunistic or even value-add strategies work; and (c) most investment managers expect prices to be lower a year from now than they are today.

The real answer is: Nobody really knows!

A friend sent me this notice they had seen:

Economy Notice: Due to recent budget cuts and the cost of electricity, gas and oil, as well as current market conditions and the continued decline of the economy, the Light at the End of the Tunnel has been turned off. We apologize for any inconvenience.

Sort of reminds me of those pages like this:

You Have Reached The End Of The Internet There is nothing more to see or do here. Turn off your computer. Take a break. Go for a walk. Read a book. Have a cup of tea. Sit and stare at the natural world. You get the idea.... Remember to wiggle your toes and get out of your head. Thank you and have a nice day!

For many music fans, last night offered a sign of hope amidst all the uncertainty. The band Phish reunited and played its first gig since 2004 in Hampton Coliseum in Virginia (I saw Neil Young in that venue in the 1980’s as I was spending time in the Tidewater Virginia area working on a shopping center redevelopment where I made the first ever Circuit City Superstore lease….how times have changed). Phish has developed a huge cult following as the heirs to The Grateful Dead. And while I have never attended one of their shows I know that these guys are ‘the real thing’ and are accomplished and serious musicians. I mention this so if you hear one of your younger colleagues mention it this week you can be up to speed on it and they’ll know you are cool!

Next week at MIPIM in Cannes I will have the privilege of moderating two events. One, the MIPIM Summit which I’ll co host with Janice Stanton of Cushman & Wakefield is produced as a live TV show with a small (40 person) audience who will be engaged in the discussion/debate with panelists Joe Valente (Allianz), Pete Reilly (JPMorgan), Dietrich Heidtmann (Morgan Stanley) and Hans O’pt Veld (PGGM). I believe some of the best direct feedback on the state of the industry that I’ll be able to give to you next week will come from this event. Also, I’m moderating a panel at the Finnish Property Breakfast where the audience will be a select group of Finnish property investors. There may be a few seats left for the MIPIM Summit. If you will be there and would like to put your name in for consideration for a seat please let me know right away (steve@simplicate.com).

Final note: I don’t know about you but I’ve been feeling tired lately and that is not usual for me. It’s not the travel that is the cause. I think it’s more the conscious and subconscious strain and drain of all of what is going on now in our industry, in business in general and in the world, both financial and human. Some days I wake up and wonder if there isn’t something more important for me to be doing with myself right now, helping people, helping children, helping animals all whom in one way or another are suffering. Recently, all I’ve been doing is making small donations (they all add up) to some charitable organizations but it’s really the time and the involvement that makes the difference. As my schedule has been what it is makes it difficult for me to commit regular time to any organization. But, there is one thing that I continue to do and it’s something that we call can do and that is to spend some time, on the phone or in person with someone who is facing challenging times these days. It isn’t important that we have a definitive answer but rather that we’re there to listen. Recently I’ve been talking with a lot of real estate MBA’s who will be graduating this spring. Most are desperately seeking a path to a position in our industry and I don’t really know what direction to point them in. But, they have told me that just talking with them and giving them some of the benefit of my years in the industry whether it be tips on networking, following up, resources is helpful. So, if you get a call from someone, whether it be a soon to graduate student or an someone in the industry who has been laid off, just think for a minute “What if this were me?” and take a few minutes to listen to them. It’s a small world ladies and gentlemen and getting smaller all the time. A little kindness goes a long way.

Where I'll be:

Mar. 10-13: Cannes to attend MIPIM, host the second annual MIPIM Summit TV show (March 12-Invitation Only) and attend the INREV seminar and moderate a session with Finnish investors.
Mar. 16-19: Philadelphia
Mar. 23 & 24: New York to moderate a panel at the iGlobal Forum Real Estate Private Equity Summit on the 24th.
Mar. 25-26: Washington DC to attend PREA's Spring Conference
Mar. 27-Apr. 2: NY
Apr. 3-6: Montreal
Apr. 6-9: New York
Apr. 10: See Umphrey’s McGee at the Nokia in NY
Apr. 13-17: NY
April 23-25: Athens, Greece for INREV’s Annual General Meeting and Conference
May 14-16: North Palm Beach, FL to attend the annual Homer Hoyt Institute and Weimer School sessions with some of the industry’s leading academics.

Photo: Giant Pelican (my favorite bird) on Isla Holbox, Mexico.

Restaurant of the week: B Cafe, Amsterdam bet. 87 & 88, New York (also 240 E. 76th St.). A lot of Belgium beers, very French speaking crowd, good bistro menu (great frites!) and reasonable prices.



These are my personal views and not that of my employer.

Stranded On the Road

I've been stranded for the past two days due to heavy snow on the east coast of the US trying to get back to NY from Mexico . It sounds better than it is as we left the island we were on for holiday and when we got to the airport were only then told of flight cancellations, scrambled to get into an airport hotel and have been just hanging, other than me trying my best to work using a blackberry. Anyway, as I had promised myself, I completely disconnected during the vacation. How? I simply turned the BB off and didn't turn it on again until we were headed back. A long time ago, someone who was an avid watcher of soap operas told me that what made them easy was that it didn't matter if you missed one or a year's worth of episodes, when you tuned in again it was like you were never gone. That's the way it seemed to me in checking in on the news yesterday. Other than the daily unique crises, the deaths, problems with world financial markets and other things are all, well, same old same old. But not really as they're only the same as things were a long time ago, before 24/7 media created crises out of simple events except that they're happening to us, right here, right now and things are not getting any better it seems.

I first learned the meaning of 'bailout' when I was 12 and Billy Gallin, the head of the waterfront at Camp Walden said, 'Stevie, go bailout that rowboat, it's filled with rainwater.' So I got a coffee can and did the job. But the word that the world has latched on to that will save our global rowboat from going under is being totally abused. To continue to give money to companies like AIG or any U.S. car manufacturer or Citigroup is an outrage and an insult to me as a taxpayer. If you and I were in a business together and we couldn't make a go of it, who is there to bail us out? No one, that's who. I know, some say that letting Detroit crash will put too many people out of work. Too bad. I'm sorry. I've been out of work before and no one was there to save my job. How about if we just let things operate in the way that the creator of the modern economy intended for it to? Why do we have to bailout or save everything and everybody everywhere all the time? Anyway, having been through economic ups and downs in the real estate industry since 1973 and having been intimatedly involved in the workout business before the term became fashionable and with the RTC business-which to my knowledge was not considered a 'bailout'-let's just use the skills we've learned instead of making things up all over again. There isn't a coffee can big enough to bail out this boat; we have to be brave, make tough decisions, help people who really need it and realize that the boat has sailed and that the next boat is still in dry dock, being fitted for even rough seas.

I'll be attending my sixth MIPIM next week. It's one of the two global commercial real estate events held in Europe each year and I'll be able to report about it to you next week after having c0-hosted, along with Janice Stanton of Cushman and Wakefield, the second annual MIPIM Summit TV show and also a breakfast of Finnish investors but I have some suspiscions about what I'll see and hear there.

One more thing. I've learned over the years how important it is to decompress but years ago when I went on my typical American one-week vacation I hadn't been as aware, then being a younger typical Type-A versus a Type A in rehabilitation, that it takes two days to decompress from work where you can enjoy three days vacation before starting to think about work again in the last two days of the week....and that was B.I.-Before Internet. The Internet and email and blackberry type things have made disconnecting and thus decompressing that much more difficult. But decompressing is not just for vacations. It's important to keep in mind every day when you're transitioning from your work day to your personal day and while stressful times in the business world sometimes get us even more focused on instantaneous responses at any time on any day to a seemingly urgent email this is the time we need to focus more on protecting ourselves from the results of too much stress which are both physically and mentally debilitating. So, taking another tip from the Type A rehab suggestion box and remember that tomorrow is another day and that not everything has to be completed today but that those things that need to be completed should be as to not complete them will add unnecessary stress to you overnight and may even distract you from watching the world fall apart in front of us on the evening, or should I say, continuous news-God forbid.

Someplace to check out-Holbox Island, Mexico. The off-season, like now when the people who want to swim with the Whalesharks invade, is very, very peaceful and beautiful. Just remember that even though there are few autos/trucks, there are a million gas powered golf carts through off fumes so when you look for a place to stay make sure it's right on the beach and not behind the 'road' where these annoying things drive up and down all day.


Where I'll be:

Mar. 4-5: New York
Mar. 6: Montreal
Mar. 10-13: Cannes to attend MIPIM, host the second annual MIPIM Summit TV show (March 12-Invitation Only) and attend the INREV seminar and moderate a session with Finnish investors.
Mar. 16-19: Philadelphia
Mar.24: New York to moderate a panel at the iGlobal Forum Real Estate Private Equity Summit
Mar. 25-26: Washington DC to attend PREA's Spring Conference
April 23-25: Athens, Greece for INREV’s Annual General Meeting and Conference



These are my personal views and not that of my employer.

UNC Case Competition

I had a great experience today, serving as a judge in the University of North Carolina (Kenan-Flagler School of Business) MBA Real Estate Challenge. The development case was really complex and all of the 16 schools that participated did a remarkable amount of analysis, preparation and presentation in a short time. The winner, in very tight voting was, North Carolina. The runner-up was UCLA. Tied for third place were Columbia and Dartmouth. After the presentation and getting a chance to chat with a number of these students in a more relaxed environment after the challenge, believe me, there is hope for the future of the commercial real estate industry! In the library of the Carolina Club at the University of North Carolina I found a shelf of books called “The Yackkety Yack” which was the college annual (yearbook as it were). I pulled out the very first issue for the first ever graduating class of 1901 and found a couple of interesting things: 1. This from the preface: “It has passed into a proverb that success is reached through failure-repeated failure has come to all. We have made many mistakes. Man, at best, only moves towards what is perfect, and the goal is reached through the lessons taught by repeated mistakes.” 2. These may be the best. Copy from two ads: a. Abbot & Stephens Real Estate & Investments Charlotte, NC “From 20-100% made on real estate investments through this agency. Money will always bring sure and quick returns when judiciously paced in this line of investment.” b. Bank of Chapel Hill: “A word to the wise is sufficient. Don’t run a risk by keeping your money in your room or pocket. We solicit student deposits.” Given that I’m thinking seriously of starting to keep my money in my room I’m not so sure about this one but the real estate above is a classic! Some quotes from the presentations at the real estate conference yesterday: 1. Every thorn has its’ rose 2. Underwriting is back and if you’re a user of capital it’s a real bummer. 3. I never saw a developer who saw an escrow he liked. 4. What deals are getting done today (worst to best): Hospitality, retail (grocery anchored shopping centers), office/industrial, multi-family. 5. In 2008 only two asset classes did well: Treasuries and Wal-Mart. 6. 65% LTV is looking like the new ‘full loan.’ 7. Multi-family is the only asset class that has even a shred of normality. 8. Ideas for the future of CMBS: a. Let the originator hold the B piece b. Of every 10 loans originated, one loan, randomly, must stay on the originators books 9. Buy paper, not property 10. If you’re offered a destination or resort hotel in a city whose name you cannot pronounce-pass on it. 11. We expect this to be one of the best distressed environments ever. 12. Capital will be weighted towards opportunistic strategies. The With 4Q08 valuations starting to flow into the hands of institutional investors in real estate, the impact is yet to be seen. And, in an article on the New York office market this week by real estate journalist Terri Pristin in the NYTimes, when several industry experts were questioned, Bob White of RCA (Real Capital Analytics) was the only one to be brave enough to give what I and many others feel is the real answer. “The true answer about where prices are right now is, ‘I don’t know.” And, my friends, I believe that is the answer to most questions about where our economy is and where it’s going and maybe more importantly, when. Except from a letter to the editor in the NY times last Sunday talking about a book that had been banned in the Miami Dade (Florida) school system: “When I was a sophomore in high school, my history teacher assigned "Masters of Deceit," by J. Edgar Hoover. My father, ever engaged in his children's education, skimmed the book and thought it a nasty piece of anti-Communist propaganda. No friend of Communism, my father — a Holocaust survivor — had left Poland in 1945 to escape the Soviets. He directed me to read an additional book, "The Communist Manifesto." I knew very little of Karl Marx or his book. When I asked why I should read it, he told me I couldn't possibly understand the Hoover book unless I knew what he was writing against. After I had finished both books, my father and I had a long conversation about both, in which he helped me to refine my understanding of the books, of the world, of politics and of what it takes to be truly educated. I recall very little of those books, 40 years later. What I do remember is a father who cared deeply that I learn to think for myself, and his lifelong lesson that the best way to combat bad or insidious information is with more information, with careful thought and with exposure to the broadest possible array of ideas. Too bad he didn't have a chance to talk to that father in Miami." First. Can you believe that we’re still, in 2009, seeing the banning of books in the United States? Second, I believe that the two most powerful things that a parent can instill in a child is a feeling of self-esteem and the ability to think for themselves. Where I'll be: Feb. 22-29: Vacation in Mexico….totally offline! Mar. 2-5: New York Mar. 6-9: Montreal Mar. 10-13: Cannes to attend MIPIM, host the second annual MIPIM Summit TV show (March 12-Invitation Only) and attend the INREV seminar and moderate a session with Finnish investors. Mar. 16-19: Philadelphia Mar.24: New York to moderate a panel at the iGlobal Forum Real Estate Private Equity Summit Mar. 25-26: Washington DC to attend PREA's Spring Conference April 23-25: Athens, Greece (not Georgia) for INREV’s Annual General Meeting and Conference These are my personal views and not that of my employer.

Walking through Central Park

(Left-Momentary sunrise on Central Park West apartment building this morning). (Right-Valentines Day window in shop on Fifth Avenue). Walking through Central Park in New York in the morning on the way to the office I noticed something for the first time this week. I heard what first sounded like a church bell ringing but looked up and saw the Delacorte Clock, which I had never noticed before. This from the web: One of the most beloved monuments in the parks of New York City, this musical clock hovers above the arcade between the Wildlife Center and the Children's Zoo. A gift of publisher and philanthropist George T. Delacorte (1894–1991), it was dedicated in 1965. Delacorte conceived of the clock as a modern version of belfries in churches and city halls dating back to the Middle Ages. Italian sculptor Andrea Spadini (1912–1983) crafted the whimsical bronze sculptures, which depict a penguin, kangaroo, bear, elephant, goat, and hippo parading with a variety of musical instruments as well as two monkeys with mallets that strike the bell. Each day between eight in the morning and six in the evening, the clock--now digitally programmed--plays one of thirty-two nursery rhyme tunes on the hour. On the half-hour, the mechanical performance is a bit shorter. Just one of those great things that happen when you least expect them. And all of this just next to the sea lions who crane their necks to the sky (who knows why?) seeming to thrive in the windy morning while sprawled in what looks like the most uncomfortable positions on rocks totally oblivious to the fact that 49 people the night before in an airplane crash in Buffalo and those unknowing folks never again having a chance to experience things like this or a kiss from a loved one on Valentines Day or watching their children grow up or simply enjoying the breeze of an early spring morning. Maybe we all do just have a certain amount of time on earth and if so the worst part is that we don't know how long. Here’s an excerpt from a column on Innovation and Marketing written by my friend Gunnar Branson. Gunnar has had his finger on the pulse of marketing, branding, innovation in the commercial/institutional real estate industry for many years. I met him when he was building GE Real Estate into a globally recognized brand. I think this is particularly poignant today: There are many reasons for a recession to happen, but whenever an economy is in one, the rules for success change dramatically. Capital becomes scarce, raw materials unreliable, customers reluctant to buy. What was easy before suddenly becomes more complicated. Products that everyone had to have at any price before, suddenly lose their value. But as long as there are still people living their lives, there are ways to create something they need, want and will pay for - it just might be a little different than it was before. Companies that perceive and understand the new rules in a recession are able to innovate and thrive, while those that continue as they did before risk losing everything. Most people's natural inclination is to continue doing what they did before - even when it doesn't work as well as it used to. Innovators change what they are doing, how they are doing it and even why they are doing it in order to succeed in a new environment. Strangely then, the most dangerous strategy is to avoid innovation during a downturn. It's times like these that the imperative for every company, every leader, every manager must be to challenge all assumptions based on a rising market. Every process, every service, every product must be looked at from a fresh perspective - and changed to fit the new reality of a down market. I was speaking with someone early in the week who explained to me the difference between being laid off, or made redundant and being fired that I guess I didn't give much thought to when I wrote to you last week. It seems like the difference is that when you're fired it means that you were let go for cause so I guess what we're seeing so much of is not firings but layoffs. Either way too many people, in all walks of life, are losing jobs and in some cases, based on their expertise, i.e. a lawyer, can't find other work. And although people have generally not felt sorry for lawyers, this is far from over. MIPIM/Cannes Heads-up: Beware that a company called “The Ultimate Living Group-Trade Show Specialists” are crooks. I have it on very good authority and wanted to pass it along to you. Last Sunday I heard what might have been the most awesome church pipe organ I’ve heard thus far. It was at the church of St. John the Divine in Manhattan and it was wonderful. For a long time I’ve had a passion to hear pipe organs and whenever I’ve been away from home on a Sunday I’ve found a church or cathedral in whatever city I was in. I’m not religious although I consider myself spiritual but I’m willing to sit through any kind of service to hear a good organ and this one is breathtaking. This Sunday I'll be going to St. Marys, a hidden gem on 46th Street between Sixth & B'way. Prediction: Starbucks… I predict that by 2013, they will either be out of business or will have switched to a franchise model (there are going to be a lot of unemployed folks starting up franchise businesses and there are only so many “Sir Speedy” that any one town can accommodate)! Finally, Ward Feste with Carlyle Search in Chicago sent me an article and I want to share the following section with you:

I don’t know what the hell is going to happen. I have been in this industry for 30 years and haven’t seen anything quite like this—but then I hadn’t seen anything quite like 1973/74 when the stock market lost 50% of its value, or 1979 when the American economy was on the verge of collapse, or the recession in 1982 when more people were in unemployment lines than at any time since the Depression, or when the Dow tumbled 508 points on October 19, 1987—off a record high of 2,722.24—and on and on. The biggest difference between this and other financial meltdowns is the 24-hours-a-day news coverage that feeds off events like a bevy of hungry vampires. I do know the economy will find equilibrium. In the meantime, there are some actions you should take: first, become a messenger of optimism and explain that while economic slowdowns are a part of life, smarter investors will look to the future.

But you also need to take care of yourself:

• Remember how great it is to be alive. • Exercise, eat right, and get enough sleep. • Have a sense of purpose. • Protect your confidence. • Communicate regularly with clients and friends. • Create an environment empowering you and your staff. • Take free days and vacations. • Finally, understand and live by the Law of Requisite Variability, which states that the more flexible a person in any group is, the higher the chances are that person will dominate or become a leader in that group.

You can be that person. Have hope and a plan.

Happy Valentines' Day Honey!

Where I'll be:

Feb.16: New York Feb. 17: Atlanta, GA Feb. 18-20: Chapel Hill, NC to attend the Kennan-Flagler Center for Real Estate Development’s Annual Conference and Real Estate Challenge Case Competition (and to see the North Carolina v. North Carolina State basketball game!). Feb. 22-29: Vacation in Mexico….totally offline! Mar. 2-5: Chicago Mar. 6: Montreal Mar. 10-13: Cannes to attend MIPIM, host the second annual MIPIM Summit TV show (March 12-Invitation Only) and attend the INREV seminar and moderate a session with Finnish investors. Mar. 20-23: Montreal Mar.24: New York to moderate a panel at the iGlobal Forum Real Estate Private Equity Summit Mar. 25-26: Washington DC to attend PREA's Spring Conference April 1: Champaign-Urbana, IL to attend my son’s DMA (Doctor of Musical Arts) recital. April 3-6: Montreal April 11: New York, Nokia Theatre, to see Umphrey's McGee tour in support of their new album, Mantis. A monumental work! (t) April 23-25: Athens, Greece (not Georgia) for INREV’s Annual General Meeting and Conference April 26-20: Chicago to record my next CD These are my personal views and not that of my employer.

On the Road

This is a little longer than usual but there’s a lot going on these days.

During the RTC days, Texas was ahead of the crowd in failed S&L’s and bankrupt real estate developers. As things worked themselves through, those in Texas came back with both humility and with pride that they survived. In reading the financial news today I wonder if this time won’t be similar in at least that way. So many companies reporting huge losses. So many people losing their jobs. So much due to greed. But what's going on is much bigger than the real estate industry and much wider than just the U.S. I wonder if those who were at the helm of companies that went under or were fired from top jobs because of this that or the other thing will be able to wear that “Badge of Courage” in the same way the real estate survivors of the early 90’s did. However, when it comes to humility, well I'm just not sure.

Thanks to the kind invitation of Scott Perkins and Bill Hanson of NAI Hanson in Hackensack, NJ I attended NAI’s Global Outlook Briefing yesterday in New York. The ubiquitous Dr. Peter Linneman, now NAI’s Global Chief Economist, gave the keynote. Here are some tidbits:
1. At the end of the day it’s all about the economy.
2. Why in 2005 did I project that there would be a recession in 2009? Because if you look historically we were believing our own bullshit.
3. Economists, who are mainly university professors believe that ‘if it starts to feel bad, it must be a recession.”
4. When you fly six hours from coast to coast there are people down there who make up the economy-not everything happens on in NY, LA or SF.
5. “The world is coming to end unless we save it this weekend.” When Hank Paulson said that, New York wasn’t in shock because it’s used to hearing bullshit from Wall Street.
6. It was a bi-partisan idiot effort.
7. 2.5-3.0 million jobs have been lost already; 500,000 still to come.
8. We ran the country as if it were a deal shop-it’s okay if you’re a Goldman Sachs but it’s not okay if you’re a government.

Wardrobe note: With wind-chill at minus 8 degrees in New York yesterday I noticed that a lot of New Yorkers made the mistake of thinking that ear buds act as earmuffs. Not!

Murray Shor, veteran shopping center industry publisher and raconteur said this in his blog last week: “We all know that the dismal holiday season, with a substantial drop in shopper traffic, retail sales and overall consumer buying—despite steep discounting--is forecasting major retail bankruptcies and store vacancies within the next few weeks; mavens involved in market research are predicting 200,000 store closings this year.” Wow. There’ll be a lot of room for go-carting in shopping center parking lots. My father took my brother and I to the E.J. Korvette’s lot in West Orange, NJ to go-cart on Sundays (when stores in NJ used to be closed).

Said by a private equity exec at a NYC conference:
"The current state of the private equity industry reminds me of the Warren Zevon song: Bring lawyers, guns and money."

I got a number of emails about my story about my Dad visiting the WWII captured Japanese bomber. I thought you’d enjoy this one sent to me by my long-time college friend “Silent” Kal:
10-12 yrs ago took the family to DC..of course planned to go to the Holocaust museum which opened earlier that year..Got up one morning and took the family over and the line was completely around the block 360 and it was a long block..went to the window and asked how long the wait was …minimum 5 hrs… as I was walking away I remembered my father gave me this card which apparently just identified him as some WWII veteran…but what the hell so I showed it to her as my family rolled their eyes..once she saw it we were escorted in given VIP treatment and treated like royalty..As it turns out my fathers’ battalion was one of the first to liberate the concentration camps and the museum had grainy color home like movies of the event and of course, I thought I recognized him..A special room was dedicated to his battalion…It was quite emotional as well as defining what our freedom really is ..That day is etched indelibly in my mind..It is the only thing I remember vividly about that trip to DC other than the traffic (late at night construction) going to DC moved about 1 mile in 2 hrs 100 degrees..The sacrifices and acts performed by our parents in defense of liberty can only be imagined by later generations..These indeed are trying times but pale in comparison to what was accomplished before us so we can experience the highs and lows of Democracy.

Congratulations to my friend Trevor Gay whose blog on Simplicity has been named one of the top 100 leadership blogs. This site is new to me but it seems like there’s some interesting topics for future reference.

I just finished reading Malcolm Gladwell’s “Outliers.” It’s a good read, which I highly recommend. Here are a few snippets that I highlighted:
• Three things: autonomy, complexity and a connection between effort and reward are, most people agree, the three qualities that work has to have if it is to be satisfying.
• It is not how much money we make that ultimately makes us happy between nine and five. It's whether our work fulfills us.
• Hard work is a prison sentence only if it does not have meaning. Once it does, it becomes the kind of thing that makes you grab your wife around the waist and dance a jig.
• If you work hard enough and assert yourself, and use your mind and imagination, you can shape the world to your desires.

I was talking to a capital raising friend of mine this week who had been fired (sorry, 'let go', 'downsized', 'made redundant' are just baloney words for being fired). He told me that the great thing about our industry is the people. He has received a number of calls from people who were former colleagues and former competitors asking how he was and was there anything they could do to help him. In a world where too many people tell me 'it's sad how few people are willing to take some time to try to help someone else', this is a great thing to hear. It signals some type of positive change in how we're dealing with each other and remember, it's not the end result of what happens when you reach out to someone, it's just that you took the time to reach out.

Always on the cutting edge, France Publications has launched InterFace Conference Group that is headed by a long time industry friend, Rich Kelley. France built this business from the ground up starting with Shopping Center Business magazine into a mega-publisher with 19 titles in real estate, maintenance, construction and operations and wealth management. The combination of Rich, Jerry and Scott France and Randy Shearin should result in some very interesting and worthwhile conferences. All the best you guys.

Cool new hotel: The Nines (as in “Dressing to the nines”) in Portland, OR. Part of Starwood Luxury Hotel Collection. 525 SW Morrison Portland, Oregon

Very cool place of the week: The Tea Zone & Camellia Lounge, 510 NW 11th Avenue, Portland, OR (503) 221 2130 (http://www.teazone.com/index2.html). While I only got to grab a fast, relaxing tea (is that an oxymoron?) it’s a place that I hope to get back to (or open one just like it somewhere!). They have a great selection of teas and tea paraphernalia which they’ll ship anywhere.

Where I'll be:

Feb. 9-16: New York
Feb. 17: Atlanta, GA
Feb. 18: Raleigh, NC
Feb. 19: Chapel Hill, NC to attend the Kennan-Flagler Center for Real Estate Development’s Annual Conference and Real Estate Challenge Case Competition.
Feb. 22-29: Vacation in Mexico….totally offline!
Mar. 6: Montreal
Mar. 10-13: Cannes to attend MIPIM, host the second annual MIPIM Summit TV show (March 12-Invitation Only) and attend the INREV seminar and moderate a session with Finnish investors.
Mar. 16-18: London
Mar.24: New York to moderate a panel at the iGlobal Forum Real Estate Private Equity Summit
Mar. 25-26: Washington DC to attend PREA's Spring Conference
April 1: Champaign-Urbana, IL to attend my son’s DMA (Doctor of Musical Arts) recital.
April 23-25: Athens, Greece (not Georgia) for INREV’s Annual General Meeting and Conference



These are my personal views and not that of my employer.