GLG News by Mr. Jack Kern, Managing Director
GLG News is now G+ Insights
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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.
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Foreclosure Shocks Surprise No One but CNN
March 23, 2009
Rise in foreclosures 'a shock' | money.cnn.com
It is starting to turn out that money.cnn.com (c) is part of comedy central (c), at least unintentionally. The headline, Rise in foreclosures 'a shock,' simply misses the point that foreclosed homes are on the rise across the country. The real increase in reported cases in February shouldn't have shocked anyone because local and regional initiatives have run their course in many places and homes that were effectively protected from court action finally hit the list. This constant sweepstakes in the media to drum up issue selling headlines has hit a new low, the false claim that somehow nobody saw this coming. Money ought to be ashamed.
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March 16, 2009
Are REITs worth it? | money.cnn.com
REITs, particularly the ones noted in the Money.cnn.com (c) article have had a pretty good run, but there is the same potential risk and variability in buying these indices and shares as in other sectors. Real estate, and all of their types are sometimes in favor and sometimes not. Like anything else, buying the funds the magazine recommends is not always the best approach. Anyone buying stocks based on a magazine's recommendation might want to look at a bridge I have for sale in Brooklyn.
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Declining Home Sales Index Doesn't Tell the Story, NAR Strikes Again!
March 6, 2009
Pending home sales hit record low | money.cnn.com
Recently, the National Association of Realtors reported that their proprietary pending home sales index declined 7.7% in January, 2009 from December, 2008. This article appeared in Money (CNNMoney.com) and quoted Lawrence Yun, chief economist for the realtors group as suggesting that "Even with many serious potential home buyers on the sidelines waiting for passage of the stimulus bill, job losses and weak consumer confidence were a natural drag on home sales." Really now? According to Yun, "History suggests that home sales can rise even in times of job losses when housing affordability rises." Yun then mentioned he expects home sales to turn around by the summer. Makes you laugh doesn't it?
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The "Fix" Is In and Many Will Not Qualify
February 27, 2009
Who won't be helped by housing fix | money.cnn.com
According the the CNNMoney.com (c) article, most current homeowners and borrowers with under water mortgages will not qualify under rules set for foreclosure assistance. The premise is, even if things are bleak, if you can afford your current mortgage and still have a job, you won't qualify and if you're in trouble, have an upside down mortgage and lost your job, well, you might not qualify either. These arcane rules, designed to help about 9 million families under the $75 billion program have very specific requirements.
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Foreclosures Tap Fannie/Freddie Funds for $20+ Billion
February 26, 2009
Fannie, Freddie to fund part of plan | money.cnn.com
The Administration, in an effort to conserve part of the TARP appropriation approved by Congress has decided to pull approximately $20 billion out of Fannie/Freddie. Both Fannie/Freddie are currently unstable with losses mounting in the billions already. Their credit lines have been effectively doubled to $200 billion each with the Treasury. Other federal agencies are also contributing to the effort.
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When Rent Loss is News - Multifamily Residential in Manhattan Declines
February 16, 2009
A Month Free? Rents Are Falling Fast | www.nytimes.com
The report in the NY Times illustrates the current weakness in residential rents in Manhattan. For a wide variety of reasons, chief among them the job loss caused by the decline in the investment banking industry, New York residential real estate is under stress and it has become a resident's market, instead of an owners.
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Vacant Office Space Creates Vacant Stares from Lenders
January 7, 2009
As Vacant Office Space Grows, So Does Lenders’ Crisis | www.nytimes.com
It is, without a doubt, well known that all of the real estate sectors are suffering some decline. Office occupancy is, not surprisingly continuing to deteriorate and the impacts will largely be felt in core cities and central business districts. Lenders and financial partners are rightfully concerned, but the future may not be as bleak as it seems.
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Sovereign Wealth Funds are Major Investors in Commercial Properties
December 17, 2008
Sovereign wealth funds poised to snap up global real estate | www.propertywire.com
CB Richard Ellis is reporting that Sovereign wealth funds will own up to 20% of global real estate worth with an estimated value of $725 billion by 2015. There has been a rise in these funds as more countries look to the safety and security of the Western nations. Apparently international bankers believe that a lot of the funds are on the sidelines waiting for market conditions to stabilize before committing to a particular property sector. "This means that they will have bought between 15 and 20% of total international property by 2015 while increasing competition for trophy assets in the US and UK where property prices are low," according to the article.
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Commercial Concerns Rise Faster Than Delinquencies
December 3, 2008
Commercial Mortgage Delinquencies on Rise | www.financialweek.com
Commercial properties are seeing some real stress in many markets and as the economy has continued to falter, there are reasons to feel concerned about the status of their mortgages and prospects for remaining current. In many respects, commercial properties are more insulated from failure because of the structure of ownership and the strong economic incentive not to walk away from a loan. The reality is that the scale of failures so far, however small pales in comparison to the press coverage the impending problem receives.
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National Association of Realtors Site Proves Renting Will Continue
November 27, 2008
Consumer Search Trends Show Increased Interest in Real Estate by Potential Home Buyers | www.marketwatch.com
There has been continued concern in the professional real estate community that the NAR has consistently mis-understood housing statistics. It may be charitable to call it that. This powerful industry group has fallen prey to the same line of reasoning that ultimately doomed many members of the mortgage bankers association, that it's always a good idea to buy a house. Let me share with you why their reasoning is faulty.
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October 24, 2008
This Space for Rent -- to Advertisers, if Not Retail Tenants | online.wsj.com
Major Mall Developers have finally succeeded in doing something that planning officers and public officials feared from the start. The destruction of the image on the Malls in now almost complete. With massive advertising panels now adorning vacant spaces, Mall owners opted for very minimal revenue and are actively trying, it seems, to create a new kind of shoppers repellent. While claiming to pursue the highest and most lavish architectural environments, Coney Island has made a come back in America's Malls. Now all we need is the aroma of french fry oil, wafting across the center court.
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October 22, 2008
Analyst decries REITs sell-off | www.investmentnews.com
Reit analyst Paul Puryear is brave, and providing a real public service. Those analysts who cover these specialized investments tend to be more reactive than necessary and he's done a good job make the point about value. In essence, Analyst Puryear criticizes the Street, for a sell off in REIT stocks, when the underlying value is still strong. I admire Mr. Puryear, but have some issues with his choices.
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Multiple Personality Multifamily Markets
October 20, 2008
Multifamily Development Likely to Slow in ‘09 | www.builderonline.com
The multifamily industry and in particular the investment grade rental markets popular with REITs are now undergoing some stresses. The industry has enjoyed, in the recent past, an almost unbroken string of good years with gains in net operating income, rent increases and a terrific capital market, allowing property transactions to sell at low cap rates. Now, the U.S. economy's slowdown has finally started to catch up with apartment owners, and the next few years are going to be rocky.
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Foreclosure Actions Continue to Rise Nationally
July 24, 2008
Default: the View Behind the Numbers | www.bendbulletin.com
The number of foreclosure actions continued to rise in the first part of this year and owners and investors found they were unable to either refinance or sell the homes for what they had in mortgages. One of the little understood facets of this current phase in the disintegration of the housing markets is the fact that many of these homes were purchased from around the middle of 2006 until the 3rd quarter of 2007. The upshot of this is that foreclosures can, in many places take a great deal of time to register on county records. Those foreclosures now in the initial stages of default could be showing up by the end of this year. The forecasts for additional defaults are all uniformly high, and our expectation is that it will exceed 3.3 million units by the time it's over. It just depends on which metropolitan area you're evaluating.
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May 19, 2008
Investor Report: Miami-Dade County | realtytimes.com
South Florida is undergoing a major change from the height of development to the peaks of uncertainty. With almost 20,000 units in the pipeline for 2008/2009 and at least 10,000 more orginally planned after that, it shouldn't be a surprise that condos are being sold wholesale right now. Keep this in mind for South Florida real estate investment: 1. There is wide variation between what is available on the market and the boom and bust cycle is actually in its infancy. As the article illustrates, banks and the foreclosure process are just starting to make units available. 2. The economics of investing in South Florida, at least in the short run are questionable. For the longer term, there may be opportunity, but with other problems on the horizon for the Florida economy, judicious analysis is required. 3. Lenders and investment professionals are spooked by the news out of South Florida and the prospect of buying at even at 50% discount pales by the reality of continued falling prices.
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