New Year, New Start
Mike Moloney, President
We're all glad that 2009 is done.
I don't know about you, but I've decided that I am not waiting for changes any longer. I am going to make changes myself in 2010.
My first change is to provide to you, the certified specialists (CS's) of the Commercial Real Estate Institute (CREI) a weekly "newsletter" on items that may be of interest to you. This is the first such newsletter. there will be a new one posted here every Friday.
I invite you to suggest topics or sources of information, not just now, but whenever you read or hear of something. You can simply email me Mike@Commercial-Real-Estate-Institute.com or call me at 602-285-1433. I would appreciate your input. I would also like to invite you to contribute to the newsletter yourself. Each of you is really specialized, and the rest of us would benefit by learning from you, too.
Here are some current "events".
"Big Money" is still sitting on the sidelines waiting to see if the Obama administration is going to actively pump the PPIP (Public Private Investment Partnership) directly into CRE. The current plan is to use TARP/PPIP to bolster the CMBS market, but many in the adminstration object to doing anything that would benefit Wall Street, which would actually issue the Commercial Mortgage Backed Securities. Those objections have held things up for more than 8 months.
They have decided to NOT buy up all distressed CRE with TARP money, and then sell the assets or paper at 35% to 80% discounts. A lot of "opportunity" funds were hoping the government would do exactly that, just like the RTC did. Personally, I think this decision is a wise one. The Government does not need to intervene in CRE as it did in the auto industry.
The much awaited "foreclosure auction" of the "W" resort in Scottsdale actually generated several participants, who drove the price up so high that even some of the subordinated creditors got money. This, in a hospitality market experiencing a 40% to 60% vacancy rate in rooms.
The same thing appears to be happening in the hospitality sector in Las Vegas. THe much ballyhooed sale of Planet Hollywood likewise resulted in a bidding war among invited bidders. Keep in mind that vacancy in Vegas is still less than 20%. (That will go up statistically since the massive city center has just opened.)
The private auctions appear to have a lot of activity.
How can we get "in on the action"?
One way is to have a Buyer Representation agreement signed by the person who will sign the check to buy the asset. Obviously the "sellers" don't have any equity or cash with which to pay a commission. sometimes the BK court will approve a commission to a listing company, which may offer a co-broke fee.
In the next 60 days, both the FDIC and some small and moderate sized community banks will be listing CRE for sale. Most of it will be either user properties, such as office condos, or small mu;ti-tenant properties. You might consider co-operating with a residential REO listing broker to capitalize on the relationships they may have inside the lending world.
More next Friday, Jan. 8.