Mr. Jack Kern

GLG News by Mr. Jack Kern, Managing Director

GLG News is now G+ Insights

G+ is a community for professionals, academics and entrepreneurs to connect through online discussions and in-person meetings. You will continue to see G+ Insights (formerly GLG News) here as well as on the G+ website, where you can share and discuss the G+ Insights you read.

Camden Properties Trust Lays an Egg in Texas?

July 5, 2011

Analysis of:Camden Closes $261M MF Portfolio Acquisition | www.globest.com

Camden Properties Trust NYSE:CPT) , the well respected residential REIT, run by always amiable and friendly CEO Rick Campo recently announced the purchase of eight apartment communities, totally 2,957 units. The properties, spread across 4 markets in Texas increase the firm's holdings to 69,170 units, including deliveries under construction. If the press releases are to be taken at their word, then it means the average cost per unit is a stunning $88,265, We're surprised, to say the least.

Archstone to Go, or Want to Buy Some Units?

June 21, 2011

Archstone-Smith was a very well regarded real estate investment trust right up until it went private after being acquired by Tishman Speyer and Lehman Brothers Holdings in 2007. The firm has been largely quiet since then, just managing their properties and holding on to long term entitlements. Now they are back in the news, with the prospect they might go public again, or be sold off in a free for all. With $18 to $22 billion in apartments at stake, neither choice is clear.

AVB Drops Out of the Race and Becomes a "B" Company?

April 8, 2011

There have been a number of reports highlighting Avalon Bay's newest strategy of seeking to grow through acquisition of B class assets. There is a good likelihood the strategy will be misunderstood, especially given their "mysterious new research effort." The reality is AVB may be abandoning their previously successful core strategy in an effort to become a clone of EQR. Anyone following EQR knows the mix isn't always magic.

Season Opener - RealPage 1, Yardi 1

April 1, 2011

Analysis of:RealPage Countersues Yardi | multifamilyexecutive.com

RealPage has filed a counterclaim against Yardi, alleging among other things that Yardi engaged in anti-competitive practices and mis-appropriated trade secrets. This latest round of litigation among property services giants seems to be getting more complex with each individual filing. There are some allegations that a former chief information officer took certain intellectual property secrets with him when he joined Yardi. The game begins...

RealPage and Yardi Locked in Legal Wrangle over Evergreen's Activities

February 16, 2011

The two leading companies in the property management space, RealPage and Yardi claim a majority of market share in the multifamily operating platform space. The recent filing of a lawsuit alleging that an operating subsidiary of Realpage engaged in practices that harmed Yardi has not only raised the specter of an ugly battle, but also opened the door to shine a spotlight on the real differences between the two firms. Whatever the outcome, it may well be that RealPage is the ultimate loser.

The Effects of Demographics on the Apartment Industry

February 11, 2011

Analysis of:The Effects of Demographics on the Apartment Industry | www.multihousingnews.com

Published in Multihousing News February 4th, 2011“The demographic of renters is changing in an unprecedented way, by age, family, composition, country of origin and even head of household,” says Jack Kern, managing director, Kern Investment Research LLC.The changes have been occurring even as we speak, and apartment companies have certainly already been laying the groundwork to receive the new customers. Echo Boomers, Baby Boomers, immigrants, single households, older renters are all cohorts that will be the customers of apartments. Larger apartments, smaller apartments, a greater emphasis on downtown living, are all a part of the mix.The demographic profile of the U.S. has been undergoing massive transformation within a mere 50 years, and the apartment industry has been feeling at the least the trickle-down effects. As the latest data from the census bureau indicates, the U.S. population has hit 308.7 million, an almost 10 percent increase from 281.4 million in 2000. The population is inexorable marching towards a projected half a billion by 2040. The majority of babies born in the country are now members of minorities.The biggest trend that preoccupies most apartment companies today is the entry of the Echo Boomers into the renter market. This is the cohort born between 1980 and 1995, and they number 80 million. The “best estimate” is that there are about 15 million Echo Boomers that will enter the prime renter ago of 18 to 34 this decade, according to Kern.

RealPage, Inc. (Nasdaq RP) Poised for Growth or Running on Empty?

December 30, 2010

Recent IPO (RP) RealPage is looking for growth that may not materialize. The multifamily real estate sector has seen, in the past 10 years, an amazing transformation; from an industry that had a broad range of owners and a tremendous amount of transaction activity to one with great consolidation in property operations and fewer majors than in the past 5 years, including a number of very prominent REITs that have gone private.

AvalonBay (AVB) Positioned to See Growth

September 24, 2010

AVB has traditionally played at the higher end of the multifamily market, and as the economy declined, they were not immune to losing residents. It now seems they're one of the better positioned REITs for growth and performance in both the short term and looking forward. Several factors are converging that will benefit the company moving forward.

AVG, BRE, CPT and Others Poised for Growth?

September 14, 2010

The public apartment companies are perhaps the most resilient and sustainable part of commercial real estate right now. After a devastating loss of net operating income and some of the most lopsided and irresponsible layoffs this industry has ever seen, the major publics may now finally be back on track. The question is, which direction is the train headed?

EQR Faces Roller Coaster Future to Appease Neithercut

January 27, 2010

Analysis of:Equity Residential Appoints Mark Shapiro to Board of Trustees | www.earthtimes.org

In a little noticed press release, Equity Residential on January 26th, 2010, appointed Mark Shapiro to the company's board of trustees. Shapiro, 39, is the Chief Executive Officer of Six Flags, Inc. the world’s largest regional theme park company. Prior to joining Six Flags in 2005, Shapiro spent 12 years at ESPN. He also serves as a director of Live Nation and the Tribune Company. Whether you're long or short on EQR, it makes you wonder doesn't it?

Multifamily Becomes Multiple Choice in the North Hollywood, LA Submarket

October 1, 2009

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 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 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 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 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.

NAR Promotes Higher Home Sales As Sign of Recovery

May 1, 2009

Analysis of:Is Now the Time for Some Home Buyers to Make a Deal? | www.cnbc.com

This article, written with references to the National Association of Realtors and mostly quoting realtors provides an industry line specific recommendation about the real estate cycle and buying homes. The NAR has been under increasing criticism, both inside the home building and real estate industry and even from its former chief economist, now in private practice. The central issue is the almost paranoid need to present good news for realtors at any cost, with honestly being the first casualty it seems.

Miami Condo Sales Showing Longer Term Outlook

April 30, 2009

Analysis of:Miami housing: The power of cheap | money.cnn.com

Miami is one of America's great cities. With award winning architecture, an internationally recognized skyline and an attractive quality of life, it is perhaps unsurprising that the city is rebounding. In the money.cnn.com article, the highlight is the number of people who have bought homes out of distressed situations. According to quoted First American Core Logic, South Florida housing prices declined 36%, while the foreclosure rate in February hovered around 9%, up from approximately 4% a year ago. The upshot: Media attention on the demise of South Florida was overplayed.

EU Center Development Slows

April 29, 2009

Analysis of:New shopping centers across Europe delayed or cancelled as economic downturn bites | www.europe-re.com

The quality of life for many Europeans has unquestionably improved as such popular habits in the West as visiting shopping centers and spending money have become a favored practice. Now, with the recession becoming a more international phenomena, not surprisingly many new projects are being put on hold or cancelled entirely, just like, well - here in the U.S. It just goes to show you that recessions do not observe boundaries and regional economies are sometimes not so regional. Even the typically American problem of getting financing has been exported to the EU and surrounding areas.

California Home Sales Tank Filling but the Trend Still Leaks

April 13, 2009

Analysis of:Signs of life in California real estate | money.cnn.com

Oh those clowns at CNNMoney.com are at it again... California has become the poster child for housing excess, with foreclosures leading the nation and entire neighborhoods comprised of empty tract homes. Recently the California Association of Realtors announced that the median home price has fallen to $247,590, a 41% decline from a year ago. Not surprisingly the vulture investors are picking over the carcass' of the far flung suburbs looking for deals, and beyond surprise home sales jumped by over 600,000 homes. CNNMoney promptly jumped to the assertion that the CA housing bust may be over. I do believe one of these days they'll get it right, but not this time.

Housing Short Sales Spell the Beginning of a New Problem

April 7, 2009

Analysis of:$500K homes now selling for $200,000 | www.cnn.com

Across the nation, in lush neighborhoods, previously known for their exclusive addresses and opulent surroundings, the aura of for sale signs and new home purchases is becoming a familiar theme. In previous housing cycles, these home buyers would never have found the bank owned real estate anything close to affordable, but with dwindling prices and weak kneed sellers, anything is possible. What appears, however to be a boon to buyers is a warning shot across the bow of neighborhoods across the U.S. Simply put, the second wave of panic selling is coming.

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