Study Group: Housing Market Researchers (US)

GLG News^SM Analyses by this Study Group's Leading Experts(?)

Multifamily Becomes Multiple Choice in the North Hollywood, LA Submarket

October 1, 2009

Analysis by:Jack Kern, Managing Director,

Analysis of:Apartment Know-How in NoHo? | online.wsj.com

The Wall Street Journal report, by Maura Webber Sadovi, published on September 30, 2009 highlights what has become an increasingly common occurrence, the decline in property values over the past several years. The example used, a 438 unit deal in North Hollywood was almost sold for more than $140 million. Most recently, the same deal was sold for $96 million, a precipitous decline in value to say the least, and the carnage probably isn't over.

Brookfield's $4.9 billion Investment Unlikely to Perform

August 14, 2009

Analysis by:Jack Kern, Managing Director,

Analysis of:Brookfield's $4.9-billion bet on the bottom | www.theglobeandmail.com

Brookfield Properties is making a major bet on the status of the U.S. housing market and rushing headlong into buying what they characterize as distressed assets in a number of major American and worldwide markets. It's interesting that they've raised about $5 billion to invest, and this may signal the willingness on the part of investors to take chances. In this instance, I think Brookfield didn't really get the right research behind the decision and are going to fall flat. 

Landmark Mall Not A Landmark Opportunity

July 10, 2009

Analysis by:Jack Kern, Managing Director,

Analysis of:As Owner Struggles, Landmark Mall Languishes | www.washingtonpost.com

Landmark Mall in suburban Virginia has been in decline for almost 20 years, as cash strapped GGP milked the center for any operating income they could get. In what was supposed to be a grand vision of future retailing and commercial space, GGP simply waited too long to redevelop the center and now sits on a white elephant, replete with local uses and property tax blight. The site isn't as valuable as the City of Alexandria believes and the area is changing, and not for the benefit of GGP.

REITs Slow Dance for the Street

June 30, 2009

Analysis by:Jack Kern, Managing Director,

Analysis of:Multifamily REITs see Underweighting by BOA-Merrill | www.globest.com

The apartment industry is subject to a great deal of coverage, and some of it, justified or not is decidedly negative. As an industry that is subject to great challenges, it also meets property management issues with concessions and no increases at renewal. In many places, the levels of site traffic are down, but submarkets prevail in this business and the downgrading of REIT stocks in multifamily overplays the reality of future rent growth in some markets. Property prices are declining based on in-place rents and so future IRR considerations are vastly more complicated than ever before. With the downgrade of REIT securities, the vast number of shares shorted will be rewarded, but long term, apartments are stable.

Restoring CMBS Key to Future CRE

June 26, 2009

Analysis by:Jack Kern, Managing Director,

Analysis of:Worries over systemic risk in CMBS | www.ft.com

The Federal Reserve Bank of New York, through president Richard Dudley has made restoring CMBS a key priority. This is really good policy while it seems to contradict some of the earlier actions of the Fed, especially in light of the decisions about the eligibility of certain loan terms for loan participation. The ability of owners to refinance their obligations is what is really at stake here and with the advent of $3,400bn in loans coming due, failure to secure a working CMBS facility and market could be a disaster. The Fed's TALF program, with approximately $1,000bn in capital, starting in July is going to be a determining factor in how well the program works.

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