How to feel good

I walked by two banks hosting cocktail receptions this week, trying to give their retail customers some comfort and feeling of safety and probably also to lure new customers (after all hors d'oeuvres and wine are a sure sign of safe conditions regarding your deposits aren’t they? Plus I don’t think they had any raw shrimp, just veggies and dip!). There isn’t anything that I know about what’s going on that you don’t already know; actually I don’t know if any of us really know too much but things seem to be starting to play themselves out. So I’m going to move to another subject.

Last night I attended the annual gala of The MacDella Cooper Foundation (MCF). Those of you who have been following my travels for at least two years remember that I went with MacDella to Liberia for a month in December/January 2006/7 during which time we hosted a Christmas party for 600 needy children. MCF supports needy children. At the event last night, Nathaniel Barnes, Liberia’s Ambassador and Permanent Representative to the U.N. made a poignant remark: “When you have nothing, all you can think about is having something.” Sadly, from what I saw in Monrovia, this holds true for many, many children there. We have grown up to recognize the importance of education but there is no public school system in Liberia. In order to go to private school, it costs approximately $200 per child per year. That’s all. But when unemployment is 85% and the average wage of those employed is $24/month, $200 could just as well be $2 million.

The vast majority of Americans have seen their investments drop at least 20%. No one is happy about that and many people are frightened. There is a fog over our society caused by the shattered underpinnings of the global financial markets. This is heady stuff and it’s taking it’s toll on us as people. But I’ve learned that when you help someone, even in a small way, it makes you feel better, about yourself. So, I have a suggestion about how you can feel better: go to your checkbook and write a check for $200 to The MacDella Cooper Foundation. Mail it to:

MCF US Office
101 West 55 Street
Suite 10F
New York, NY 10019
Phone: 212 204 6574

If you like, you can contact them and arrange to have your donation go to sending a specific child to school and you can identify with that child and get updates on their progress. The $200 that I gave last night is paying for Aloysius Johnson, Age 4, to continue at the Action Faith Institute in Monrovia. The children of Liberia need us to give them some hope. This, my friends, is the ultimate win-win situation. I guarantee you will feel good about doing this and, with all the financial stress that we’re feeling, me included, $200 is one less dinner out or one less latte over two months. MacDella Cooper, called “Liberia’s Angel” is making a difference in the world. You can to. Just do it!

Where I'll be:

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. 3-5: Sacremento, San Francisco & Los Angeles, CA
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.

Thanks for reading my blog.
Many of you know that my life is built on people, on community, on collaboration and on sharing. This platform gives us all a chance to connect and reconnect. I am grateful for your support, suggestions and contributions. Thanks a lot.

Photo: NYC, 5pm, Friday, 10/24/08

Please Vote

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

show me the money

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.”
William Raspberry


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.

PREA and Tom Davis

i attended the PREA annual plan sponsor conference in chicago this week. 850 attendees but the ratio of managers/others to pension funds was reported to be 10:1. an example of why this event has grown in size each year is evidenced in two people i met who are real estate operators from different parts of the U.S. who have either self-funded or have done small syndications over the years. in sarah palin speak, "how do i get some of that there pension fund money, katie?" is the reason. but it's not that easy. anyway, on a personal level, the timing couldn't have been better as i was able to hand out my new AVIVA Investors business cards and tell people about my new gig. also, as the press release about my new job hit the trade publications and websites as well, many people congratulated me on my 'next life.' it's great to see so many industry friends and acquaintances and it was a wonderful feeling to get so many people telling me how they felt that this was such a perfect use of who i know and what i know. i used up all my business cards!

here are some of the things i heard at the PREA conference:

1. liquidity is on the minds of almost all institutional investors.
2. funny how quickly open-end funds turned from having a queue to get in to a queue to get out.
3. some institutions are increasing their allocation to real estate to take advantage of dislocation or distress opportunities.
4. is there liquidity in other asset classes vs. real estate?

one keynote was delivered by frederic mishkin, an American economist and academic at the Columbia Business School. He was also a member of the Board of Governors of the Federal Reserve System from 2006 to 2008.

1. i'm as scared as i've ever been in my life about the economic situation.
2. sub-prime losses will be more than $1 trillion.
3. what caused this?
a. financial innovation
b. asset price bubble
c. deterioration of balance sheets of financial institutions
4. if you 'nail the S.O.B.'s on wall street you may do harm to the economy in general.
5. a "let's get those rich bastards" attitude will destroy the economy.
6. restoring confidence is everything in solving the financial crisis.
7. if we really screw this up, like the japanese did, it'll take 10 years to recover.
8. medicare needs trillions to fix it; $700BB? that's chump change.

some stuff from a one panel:
a. i don't see a commercial real estate depression like the early 1990's.
b. opportunistic investors will be compensated for separating the 'good' bonds and loans from the 'bad' ones.
c. the transfer of assets will be of biblical proportion.
d. going down to the lower levels of the capital structure you can buy at distressed prices where there is no distress.
e. it's likely that a whole number of hedge funds will close up by 12/31/08.

and another panel:
1. global recession is a reality.
2. the downturn will last 16 months.
3. we are going to see the opportunities of a generation.
4. i don't want to be the last man standing.
5. not only is the sky falling, it's gone lower than the earth's crust.
6. 16 of the 20 headlines in the wall street journal could have been the headline of your career.
7. panic is not necessarily wrong when it comes to making investing decisions.
8. we see great opportunity in distressed residential mortgages.
9. that we can talk about whether GE will survive is almost unfathomable.
10. this is a generational change in america.

while i was at the conference i got the news that tom davis had died. tom was the bass player in the most significant band i played in, called "everyone." tom was a professor of philosophy and religion at a college in new york state. he had fallen a few days earlier and cracked his head open. the doctors thought he would survive although never teach again. he died of a stroke without every regaining consciousness. the last time i saw tom was in the summer of 2001 when our band played a reunion gig to commemorate the most successful and crazy summer in our lives in 1971. tom was the gentlest soul i've ever known. he had a sweet voice but could also really rock, like when he sang steppenwolf's 'born to be wild.' we were all fairly innocent when we got together in 1968 but during those ensuing crazy days we all grew and experienced all the things that you would imagine a popular rock and roll band (albeit on a local level) might get the chance to see and do. i went on the website of tom's college, searching for something about him and found a place where students can rate and comment on their teachers. i offer a few of those comments about tom davis:

-Besides being helpful, kind, and understanding he MAKES you want to come to school.
-Tom Davis has inspired so many students to go deeper than they ever thought they would or could into philosophy and themselves; the comments he writes on your papers make it feel like a conversation he's having with you about your ideas; he's awesome, and for someone over 40, he's cute as ever! Ask to see the pics of him in his band when 20ish!
-He is the best professor you will ever encounter. He encouraged me to want to learn. He is dedicated to make sure that all of his students do well. He is an inspiration to me.
-An inspired and inspiring man. Zany, insightful, intelligent, interesting and benevolent. One of the best.
-he's just funny and smart and insane and entertaining and marvelous. he's somethin', that's for sure. :) he loves to jump down the rabbit holes. he doesn't ever make a student feel like their views are insignificant, he considers all points. at times i didn't know what he was talking about, but i never felt alienated.
-he seems like one of the few teachers that cares about teaching. Great guy.
-One of the most benign, charasmatic intellectuals I have ever met. He just happens to be the GREATEST professor I have ever had!!! I never learned so much as I did from him.
-he is great, very concerned with how every individual is doing within the class, he is also crazy and loved to dash around the room acting things out
-He is involved, unbiased, genuine-a phenomenal human being who should be providing seminars for teachers.
-Tom Davis is one of the greatest professors I have ever had and he's probably the nicest person you could possibly meet.

remember, these were written before tom died. i can only imagine what his current and former students are writing and saying about him now. what do people say about you? what will they say about you when you're in the next dimension? when you think about it, we all can be teachers. we can give something of ourselves to those starting out in the business and all along the way. you can 'teach your children' as graham nash of crosby, stills and nash sang. there is nothing more powerful than taking the time to help someone else be what they want to and can be. i never got the chance to take a class with tom and i never got to say goodbye to him but it's obvious that he was a very special teacher and a special person to those who came in contact with him in his 'life after everyone.' he's the first of our band to go and now we'll never play together again. it's like puggy, our lead guitarist wrote me, "it was good to just know tom was around." there'll be a memorial service for tom next saturday; i'll be there and have been asked to play a couple of songs that were close to tom's heart, "while my guitar gently weeps" and "imagine". but i'm also going to surprise his partner debbie with an old blues song which tom used to "knock out of the park" called 'sporting life blues' written by sonny terry:

I'm getting tired of runnin' around,
Think I will marry and settle down
This ole night life,
This ole Sportin' Life, it's killin' me

I got a letter from my home,
All of my friends, they're dead an'gone
It'll make you worry,
It'll make you wonder, 'bout days to come

My mother used to talk to me,
I was young and foolish, and could not see
Now, I have no mother,
My sisters and brothers, they don't care for me

Mama used to fall on her knees an' pray,
These are the words, mother, she used to say
She would say: "Wha-oh,
My son, please change your way"

Now, I'm goin' to change my way,
I'm growin' older each and every day
When I was young and foolish,
It was so easy, to go out and play

I was a gambler, and a cheater too,
Now, it's come my turn to lose
This ole Sportin' Life,
Got the best hand, what can I do?

There ain't but one thing that I done wrong,
I liv'd that ole Sportin' Life too long
Friends, it's no good, please believe me,
Please leave it alone

I'm getting tired of running round,
Think I will marry, and settle down
This ole night life,

This ole Sportin' Life, its killing me

here's a great version by j.j. cale and eric clapton [http://www.youtube.com/watch?v=Iebv1LZOInc&feature=related].

we lived the sportin' life together in that band. tom sang about it almost every night. now he's gone and all we can do is think about how the sportin' life affected us all. sometimes it's just a spot you race by in a fast moving train. but other times it's something that becomes a monkey on your back. there was not anyone that met tom davis that did not love him. we loved him. he was our brother. we miss knowing he's around. don't wait too long to see someone in your life who you miss. make plans right now. to wait may be too long.

part of growing up is dealing with reality and dealing with problems and learning how to solve them or let them solve themselves. the lessons we're learning as a society today (especially in america) are painful but keeping them in perspective, still not nearly as painful as those in the world who are dying from hunger or disease that can be prevented or in wars and skirmishes the underlying theme of which sometimes escapes reason. i don't know if we'll ever go back to when things were simpler but i for one am going to try to go forward by going back a little and appreciating the simple things in life; appreciating what i have rather than being jealous or unhappy over what i don't have. things can change in the blink of an eye. we never lose sight of that and let's live our lives accordingly.


Where will I be?

Oct. 6-8: London

Nov. 12-13: New York to moderate a panel on "Asset Transformation Case Studies) at the fourth annual PERE Forum (Private Equity Real Estate). NOTE: PERE is offering a 15% discount for "Friends of Steve". If you want to take advantage of it just use this code (PERENY_Bridge) when you go to register on their site (http://www.peimedia.com/Product.aspx?cID=5496&pID=174808&contType=1).

December (date TBA): London to moderate a panel at a seminar hosted by Reuters Real Estate (http://www.reutersrealestate.com).

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.

Aviva Investors

i'm excited to tell you that i've joined Aviva Investors Multi-Manager Real Estate team as Head of Marketing for North America. yes, it's a long title but it helps me to remember what i was hired to do. actually, my responsibilities will probably include being an ambassador for all real estate products offered by AVIVA Investors. today is the official day of my announcement. and it's also the official day of the announcement of the launch of the AVIVA Investors brand which is the only sub-business of AVIVA plc, the worlds fifth largest insurance company. AVIVA Investors has been formed by combining AVIVA Capital Management and Morley Fund Management. we have offices in London, New York and Singapore. Aviva Investors is one of the world’s largest real estate managers with $50 billion in assets under management, and is one of the largest real estate multi-managers with more than $10 billion under management, invested into indirect real estate strategies. i’m very excited to have this opportunity.

i really don't know what i can add to everything being written and talked about regarding the state of financial affairs in the u.s. today. suffice it to say that others much smarter and closer to the situation than i have said that unless the government steps in further our entire economy could crumble. hopefully, the final solution will be one that takes everyone into consideration. but, once things do settle down, and i have a feeling that it will be sooner rather than later, we can move forward, albeit at a slower and more careful pace but perhaps 'the bottom' will have arrived and things can only go up from there. we all need to keep our fingers crossed because as a friend of mine used to say, “we’re in deep doo-doo” right now.

Pete Seger, the legendary folk singer who turned 89 this year has released a new album. I read this today in the paper and it resonated with me so I wanted to pass it along to you:
"I hope the next revolution (after the current information-based one) will take the form of a 'willingness to communicate revolution.' It will involve becoming more generous, having a better sense of humor and talking to people we disagree with. And that must happen if there is going to be a human race here in the next century,'

from time to time i have thought about 'where time goes?' i guess that while i keep a very positive attitude on life and am convinced that i am going to live well past 100, there are moments when i wonder how it is that time can be passing so fast. perhaps it happens when i think about 'what have i contributed to the world?' and whether i'm just going through life, working to make a living, from time to time taking holidays and experiencing different people, cultures and geographies and that is something that is very important to me; i also know that there are more people, places and things in the world than i will have time or means to visit. but that won't stop me from trying but not trying in the sense of putting pressure on myself but rather just continue to stretch myself when i have the opportunity to expand my horizons. but that again is something that i do for myself but i don know that the experience of meeting people on their own turf and communicating with them also means something to them as well; i know it because i have talked about it with them. and, i've always believed, that the key to bringing our world closer together, while cross border investment and business deals are one component, and cultural exchanges are another, in my humble opinion, there is no substitute for people meeting people, one on one and talking. in this way we learn that we are all human beings and that the differences represented by our language or our habits, holidays or traditions are not the true essence of who we are as human beings. maybe i'm just a wishful thinker but i continue to believe that we can bring more peace and understanding to the world by taking advantage of any opportunity we have to contribute to our world's future.

but at times like these, when it seems like in so many ways and places, the stress, strain, pain, hatred and confrontation serve to separate us as people, both within and outside our respective countries it makes it more and more difficult to think of anything or anyone other than ourselves, our families and our and their own well-being. i too am feeling some strain of what is going on in the economy and financial world in the U.S. and perhaps some of what i'm going through is due to my believing that things would always continue to get better and for many years, for me, they did. i do feel that things will continue to get better for me and that the lessons learned are not the kind that are as damaging as they are with other U.S. citizens and others around the world who have made investment decisions which have caused them to lose some of their net worth. but i guess what i'm coming around to is that i've been thinking lately of what does someones' real 'net worth' consist of. it is only measured in terms of dollars and assets owned? i'd like to believe not. there's a phrase i read many years ago in a book whose name i cannot remember: "things worth being vs. things worth having." there is a big difference.

sunday’s new york times magazine section had a special advertising section dedicated to new york lawyers. but it wasn't just any lawyers (at least i don't think it was) it was 'superlawyers.' now, i may be wrong, but i thought all lawyers were superlawyers or at least they see themselves as superlawyers. and, as having good self-esteem is important in any profession, why shouldn't they? but what was interesting to me was the way those firms that decided to spend what may be a considerable portion of their annual marketing budget designed their ads. they run the gamut from anyone wear anything to all seven partners wearing the identical suit with only minor color changes in the tie. and everything in between. i don't know which of the firms i would choose from their photo or whether i'd just dismiss them one by one based on fashion statements and facial expressions. however, in addition to the 'ads' there was a directory which was listed by discipline. real estate, as you might imagine, has a lot of lawyers in new york. included in the listings (but not in the ads) were two friends, carl schwartz of herrick, feinstein and david rabinowitz of sutherland. these guys are big-time real estate attorneys and while you may see an ad of theirs from time to time in a real estate publication you won't see them in this superlawyer supplement, new york magazine or entertainment weekly (although, while i've never held one in my hand might be a place where entertainment or libel lawyers do advertise). "perception is reality" is a saying that i believe has a lot of truth to it and when someone runs an ad or a tv commercial where ones visage (the face of several colleagues) are out in the open i think you're taking a chance. is having photos in an ad any different than having photos of people on your website? not really but sort of. while websites should be both information and somewhat promotional they do have certain components of advertising. but ads are "in your face, buddy." whether they're in print, on tv or as a warm up to a movie played in your local theatre (which i think is an infringement of one of my constitutional rights, i just don't know which one). my suggestion: always put yourself in the others persons shoes; bounce ad ideas off people you know and trust (even if you've engaged an ad firm to create your ad). you know your industry better than anyone and they way you are perceived in your ad becomes the reality.


Where will I be?

Oct. 1-3: Chicago for PREA’s 18th Annual Plan Sponsor Real Estate Conference

Oct. 6-8: London

Nov. 12-13: New York to moderate a panel on "Asset Transformation Case Studies) at the fourth annual PERE Forum (Private Equity Real Estate).

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.

terms & conditions

i read this afternoon that henry paulson is talking about creating another RTC (Resolution Trust Corporation) type entity. I was a consultant to the RTC and started and ran what was called a SAMDA (Standard Asset Management & Disposition) office. while i was happy to be involved, as a taxpayer, it was an insult. that agency made things up as they went along and the absolute waste of money was incredible; that coupled with the fire sale mentality of trying to solve the problems quickly...well, i know that there were some who benefited but again the U.S. taxpayer footed the bill for the problems created by, at that time, poor underwriting and too aggressive lending. i for one am getting tired of the government bailing out business failures in the name of the 'greater good.' if you and i owned a business and we lost money, well, we'd just have to go out of business, it seems pretty simple to me. and maybe, that is what is going on. but there must be a better way.

i don't know about you but i feel that the U.S. government is using my tax dollars in ways that i don't approve of. they're desperate actions designed to 'save the U.S. economy from complete disaster." but the U.S. economy is a free market system where anyone can 'make it' (especially in NY) and it think that too much interference is not a good thing. from those people that i've talked with, it's likely that this week, while a triple play is not the end of the 'marquee' news in the financial community because we still don't know all the bad things that are behind closed doors and secret balance sheets. to have your job pulled out from under you without any real warning is not a pleasant experience, especially if you've been doing a good job over as much as 10 years or more. seeing people stream out of their offices carrying no more than a single box or a backpack which represents their personal effects was a sad but vivid reminder that nothing really is as it seems and that we need to always prepare ourselves for the unexpected. it's why building your own network, your own community is just as important (maybe more so) during 'normal' times so that if something should happen you're not starting from scratch. that, plus the good feeling one gets from helping others. that is what linkedin and other communities are all about to me, helping each other, but maybe i'm naive. anyway, sometimes being naive is a blessing.

Henry Z. Steinway, the last Steinway to run the piano-making company his family started in 1853, died Thursday at his home in Manhattan. he was 93. i've never owned a Steinway (the baby grand that I bought in 1987 and is now living with my son in Chicago is a Tokai). i always wanted to have a Steinway. i remember first playing one and feeling the heavy action. but the one Steinway experience I'll never forget was walking into Steinway Hall on 57th Street in New York and a very kind salesperson took me downstairs to the place where they keep the big boys, the pianos that visiting concert players can choose from for their gig. there they were, just all together in one big room, some with covers on them and some just naked. the salesperson directed me to a few, saying "Try this one, so and so uses this whenever he performs in New York." but the one that really shook me up was the piano that Arthur Rubenstein used. it was a Hamburg Model D. i asked, "Are your sure it's okay?" and he just smiled. I opened up the cover, sat down and hit a full C chord with octave bass. i almost jumped off the bench. it was such a powerful sound and feel. I played just that one chord and close the cover and got up and just walked away feeling that this was a spiritual moment. Steinway is one of those 'category killer' brand names that have lasted over time. it was a family business, run with quality control and integrity: Henry started in the factory, building pianos, just like the other members of the Steinway family. on our industry, starting in the 'factory', on a building site and learning the real estate business, brick or beam by beam is the old-fashioned way. but there's no substitute for knowing the essence of what makes the 'real' real estate business tick. i think it must hold true for almost any industry.

the news that the engineer of the train involved in the Los Angeles area train wreck that killed at least 25 people was texting and missed signals is horrible. it's unconscionable and it's unacceptable (and very sad). of course, now the authorities have enacted immediate rules prohibiting such things. but the damage, oh such waste of lives, is done. but several years ago, a good industry friend of mine, died in a car accident when it's reported that he was using his blackberry while driving. please, people: there is nothing that important that cannot wait until you're in a safe place and just like the advice I gave to my sons about not riding with someone who has been drinking, I'd make the same recommendation about someone who sends or checks emails while they're driving. more and more places seem to be enacting legislation forbidding use of mobile phones while driving unless they're 'hands-free' but, as we all know (and can see) there are a lot of people who don't believe rules are made for them. it's one thing that they are willing to put their own life at risk (and those of their passengers) but they're also putting our lives at risk. defensive driving has never been more important.

Private Equity International is hosting is annual Emerging Managers Forum in London
on November 4-5. Feedback from their events has always been very positive


i must admit that i have never read the 'terms and conditions' that i agree to when i'm doing certain things on the web. do you know anyone who has? i'm sure they contain language that you agree to have them or others that they sell or trade their lists with barrage you with stuff, solicitations or whatnot. i had somewhat of a similar experience this past summer. after many years of happy motoring with T-Mobile i got a new phone/blackberry with AT&T. i started getting unsolicited phone calls soliciting me for something; i started getting phone calls from Aunt Minerva trying to find someone (i could never understand what she said in her messages) who evidently recently had had the same mobile phone number as me. i called AT&T and complained. they said they were sorry (why can't people just do the right thing instead of falling back on apologizing) and click some button so people who were calling Minerva (including some lawyers) would not bother me anymore. as far as the solicitation calls: they said i had not asked to have the "No Call" capability turned on. btw, when i bought the phone, no one even mentioned this. so after asking them how could they operate like this i just said, 'turn it on." so that didn't work and i had to call them back again and the next person i spoke with said that it had not been turned on. so much for customer service. but what i'm really talking about here is disclosure and transparency in marketing. there are firms that operate in a sneaky type way. let's say you buy something from them or sign up for an online publication. they add you to their solicitation lists and you start getting regular emails, sometimes as many as two per week offering you another one of their products or services. clearly lists are big business as they always have been and junk mail, whether it's paper in your mailbox or what amounts to spam in your inbox are just, to me, unacceptable ways of doing business. do companies that barrage you with emails think that you'll hold them in higher esteem? i just don't get it.

I was cleaning out some old business card binders this week, from 2000 and saw a number of them were commercial real estate and other tangentially related technology companies. i know some are still operating but haven't taken the time to check them out. thought those of you who were in the business then would enjoy a little stroll down tech-boom lane:

1. propidex.com
2. jobsite.com
3. darwin.net
4. teligent.com
5. workspeed.com
6. avidexchange.com
7. managestar.com
8. electricstreets.com
9. enn.net (elevator news network)
10. virtualpremise.com
11. ebuyxpress.com
12. realwired.com
13. captiger.com
14. zethus.com
15. netfish.com
16. offices2share.com
17. capitalengine.com
18. rescapgroup.com
19. monsterdaata.com
20. servicechannel.com
21. workspeed.com
22. dreamlogik.com
23. corrigo.com
24. auctionwatch.com
25. ibuilding.com
26. therealm.com
27. cypresscommunications.com
28. nextlink.com

i remember in those days i heard a friend, chris hartung, say at a conference, "there goes another company that claims they can boil the ocean." i don't know if chris originated that saying but i've always attributed it to him. chris and others, as well as myself with creol.com were passionate about how technology could and would make us more efficient and change the CRE landscape. clearly, most of us were ahead of the curve or as they say, on the bleeding edge. but as i run into those who experienced that period of time, trying to gain traction, users and subscribers if believe we all feel better for having tried it. now, both those survivors and those new companies who are taking advantage of both the adoption of applications and the younger generations in our industry, are contributing greatly to more transparency, more efficiency, more connectivity and more news, just the way it was supposed to be.

some notes forwarded to me by Norm Kranzdorf from the ICSC Capital Markets Seminar in New York last week that was attended by 400 people:

-MetLife is still doing whole loans in the 50-60% LTC – Loan To Actual Cost – not to value.

-Most speakers did not see a turn around until the 2nd or 3dr Quarter of 2009 and into the 4th.

-Bank of Ireland was the only one admitting to making large construction loans with lots of conditions such as to a well-know developer with a substantial balance sheet.

-Mezz loans are being priced as if they were equity with a due date. Pro-formas are being used with a very conservative exit cap rate.

-Most participants are focused on primary markets only and many are sticking to the northeast from Boston to DC and Texas and the northwest.

-All pro-formas are using lower rents than todays and lowering renewal rates under the option rents.

-Many buyers are concentrating on buying B notes as they can get a higher return than on a new hard asset deal. It is paper vs. hard assets. Returns range from 285 bps above treasuries to 1200 above depending on risk tolerance. Sellers are allowing long due diligence when you look at these.

-Many people are talking to the “special servicers” for deals.

-There are some bargains if you can get to the “kick out bucket” of the issuers that had to hold them when they did a CMBS.

-One JV participant said that his latest apartment JV was for $36.5 MM which required him to invest 30% of the equity using 70% debt. Pari-passu on the 30% on the pref but profits over that started at 90/10.

-Ground up deals are the hardest to get done because the construction loans are hard to find and all have very difficult terms and guarantees. Permanent loans now have more carve outs with some personal guarantees required depending on the developer. Potential construction lenders should be consulted before getting involved in to-be-built projects.


Where will I be?

Sept. 22-30: New York

Oct. 1-3: Chicago for PREA’s 18th Annual Plan Sponsor Real Estate Conference


(t) Oct. 6-8: Munich for Expo Real

Nov. 12-13: New York to moderate a panel on "Asset Transformation Case Studies) at the fourth annual PERE Forum (Private Equity Real Estate).

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.

Sunday Update

Hi. Sorry for sending this out again. I got some feedback that the font was too big and the CREOPoint link didn't work. I've tried to fix both. Thanks for bearing with me as I learn how to use this service.
Steve

There were no less than six commercial real estate events going on in New York this past week. I guess organizers saw it as a window of sorts or tried to create a window. Other than the proven or niche events, from reports I received, the others struggled to attract numbers and calibre of people they promoted being able to do. But, notwithstanding, I had a great week. The Investment and Finance seminar that RealShares ran was well attended. When I took the 'attendance' of the audience prior to starting the session I was moderating it indicated about 45% to be owner/operator/developers, another good chunk were brokers and finance types and then there were a few 'others' (which I didn't have time to inquire about). We got good feedback on our panel and it was due to preparing for it and having knowledgeable panelists who answered questions directly. I have to blow my own horn here just a little as the success of any panel also has to do with the moderator and if there's one thing I know how to do it's moderate a panel. I ran into a lot of people I knew and hadn't seen in a while both at this event and at Real Capital Analytics rooftop reception at their building at 139 Fifth Avenue. So it's clear that everyone is 'back to school'.

Here are some of the things that I heard this week:

1. "We're sitting on a lot of cash right now. Our biggest challenge is deciding when we should start deploying in scale. We just don't know." Mike Fascitelli, Vornado Realty Trust.

2. "Terrorists are not going to do anything against the U.S. before the election. They don't want a woman in office and they don't want to give the Republicans more reason to play the "terrorism" card."

3. The diversity of cities around the world that are seeing global capital investment in real estate are expanding.

4. The U.S. is the biggest exporter of commercial real estate property capital worldwide.

5. In 2007, the number of commercial property transactions in Asia surpassed the U.S. for the first time.

6. Seller financing is coming back in a big way.

7. U.S. office buildings bought by foreign investors has almost doubled in 3Q08 compared to 1Q and 2Q 2008.


Seven years ago on Thursday, I was driving to work in California. My father who lives in Florida called my wife and asked her where I was, knowing that I might be anywhere. She told him and then called me. I turned on the radio and heard that two planes had flown into the World Trade Towers. I don’t know if I’m alone but to a New Yorker like me when I heard those words I thought, “Oh, some small planes hit the TV/Radio towers on top of the WTC One and/or Two. It was only when I got to the office that I saw on a fuzzy TV that had been set up what had really happened. To this day, it is hard to believe that this could and did happen. The loss of life and the injuries that were suffered too tough to think about. But we cannot forget. Sadly, the long, drawn-out process by which a decision was made to rebuild on that site has been embarrassing for the U.S. If this had happened in London, how long do you think it would have taken to build: my guess is 18 months. But we had led a sheltered life in the U.S. for so many years and even now I get a sense that day in and day out we may consider ourselves safe again. On Tuesday I had a meeting at 195 Broadway which was the former HQ of AT&T (which which used to be called The American Telephone and Telegraph Company). I got there early and walked around the block which puts one right at the World Trade Center site. I stood off to the side for a few moments thinking back to August 2001 when my son and I saw a concert one beautiful evening on the stage in the WTC plaza. Prior to the music starting I elbowed Kevin and said, "Look up. Can you believe how big these buildings are. It's an amazing feat." That recent and vivid exposure to the buildings was why it was, and in some ways is, difficult for me to fathom their crumbling so quickly. I don't know why I'd never explored it but I stopped in to St. Pauls Chapel. They have some very moving exhibits and was also where the Sept. 11 workers took naps, got counseling, and restored themselves while working. If you're in the area I encourage you to visit it.

It’s interesting. Principal Global Investors and UBS announce reducing their real estate staffs l due to the slowdown in real estate activity but there continue to be hirings going at other firms. Perhaps it’s just a function of companies having built up larger teams over the past years when things were booming and now they just don’t need all those people. I was part of a downsizing once but I took that job (Workout officer at a large commercial bank) knowing that the best job I could do for them was to work myself out of a job. It lasted three years and it was a great experience. One thing I’ve learned from these type things along the way is that you have to keep an eye on the future, your own future. Only you are in charge of your life, whether you work for a company or not and even if you are blindsided by your employer, if you’ve taken the time to build your own visibility in the industry, nurtured your network and kept your nose clean, you’ll be able to find your next adventure whether it be a job or starting your own firm.

I don’t know about you but when I visit companies and am sitting in the reception area I like checking out the publications that they have on the table. Some companies have the Wall Street Journal, the Financial Times or industry specific publication. Sometimes there’ll be a publication, it doesn’t matter if it was four years ago, that featured said company in their cover story. For those companies that have real art in their office there may be an art book or an architectural book (most often about the city in which they’re located). But sometimes there are product research related publications, especially in the larger firms. Not long ago, I was in the office Morley (now Aviva Investors) office in London and a brochure caught my attention. On the cover it said “Peoplebuilding: A place that builds people builds business.” It's a project brochure for a site in in the London suburbs. Much of the content is accompanied by cartoon type graphics but here’s some of the language that interested me about how they’re thinking about (and marketing this concept): A place that builds people builds business. An office building shapes the people who work in it. Years of experience has taught us that if a workplace is built with people in mind, it can actually help build the people working there. If these people become more fulfilled and more energized, that has to be good for business.
What makes a building a Peoplebuilding? There are a number of things which help people work better, such as good light, good air, and attractive design and a good buzz. These things keep people happier and they encourage people to stick around-not just in the working day, but in the number of years they work with you.


Without trying to reproduce the entire brochure here, I’ll just give you some of the ‘headlines’:
Huge floor plates that allow you to be more flexible
Light: lots of glass. (Bright places, bright people).
Air: Good air puts people in a better mood.
Life Beyond Work: bar/brasserie, health and fitness club including day care center (Energy breads energy).
Spirit: a change of environment can raise peoples’ energy levels, clear their heads or give them an idea they wouldn’t otherwise have had.
Peoplebuilding is designed to make people feel good. The buildings and landscape encourage visitors to be inquisitive and sociable. The sounds of a meandering stream, people chatting and the wind in the trees encourages people to be more community minded-proud of their workplace.

Yes, this is a suburban location but I feel that these are the kinds of things that many workers can be attracted to because it talks to their needs and likes as human beings. Yes, the ‘green’ and ‘sustainable’ movements are very important and good and are incorporated into this particular project as well. But mostly, as society changes in ways that perhaps Dr. Schweitzer was way ahead of happening, things more than money are starting to mean a lot to a lot of people around the world. The world consciousness is raising and it’s the young people, who are concerned about their future and the future of planet earth, that are leading the charge. We in the real estate industry can never lose sight of the future.

From Seth Godin’s Blog this week:
Fixing the one big thing

• Joe Biden is long winded. His voters say so, so does the press. And now his new boss does as well. The feedback couldn't be more clear. So why not fix it?
  

• Verizon has mind-numbingly bad customer service. People hate to call them. People switch providers just to avoid this problem. So why not fix it?

• DiFara's makes the best pizza in New York. But it takes 90 minutes or so to get a pizza. Everyone complains, so why not fix it? In the case of DiFara's, the answer is easy: because fixing it would make it normal. It would take away what makes the place special. People wouldn't complain any more, but people wouldn't go, either.
  

If your 'one big thing' is a key part of what makes you successful, how dare you change it.
On the other hand, if momentum or laziness or lack of will (or focus) is the thing holding you back, it's time to get serious. When you remove the one big thing from people's list of objections, your career and organization will take off.
Joe Biden can carry a timer in his pocket. He can become reticent in public. He can, in just one day of hard work, solve his problem. Verizon can invest focus and and money and solve their problem. AT&T can invest and fix their wireless network. It just takes commitment, not a miracle.

I met with Jean-Claude Goldenstein, the founder of CREOpoint. He went through a thorough explanation of how the site works now and what additional features and opportunities it will have. He is one of the most passionate guys I've run into in a long time and I respect what he's doing. And, while I've been spending more time on Linkedin and Facebook and have gotten some idea of how people are using them (you need to decide to allocate a part of your week to these things), CREOpoint is looking to take the best of those sites and aggregate them. In a similar but different way, Reutersrealestate (http://www.reutersrealestate.com) has launched their own community (Disclaimer: I have been doing some advisory work for Reutersrealestate). It seems like our industry, one of the slowest to adopt technology, is finally catching up.

I was walking past the MTV store on Broadway in New York and stopped in to see some kids playing with the 'video game', "Rock Band". You don't have to be a musician to thoroughly enjoy it. It is very cool. Rock on!

Thanks for signing up for my blog. Thanks for your notes. If you have the time, please pass along the url to others who you think may be interested in reading this (http://stevefelix.blogspot.com).

Thanks. I appreciate it.

Where will I be?
Sept. 9: New York

Sept. 10: New York for RealShares Investment & Finance Conference
http://www.almevents.com/conf_page.cfm?pt=/CustomerFiles_sri/agenda/detailed_agenda.cfm&web_page_id=9491&web_id=1147&instance_id=28&pid=758&iteration_id=854
() where I’ll moderate a panel called “The Influence of Foreign Banks on Today’s Market.”

Oct. 1-3: Chicago for PREA’s 18th Annual Plan Sponsor Real Estate Conference

Oct. 6-8: Munich for Expo Real

Nov. 12-13: New York to moderate a panel at The PERE Forum (Private Equity Real Estate). http://www.peimedia.com/Product.aspx?cID=5496&pID=174808&contType=2.

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.