Worth Repeating Summer 2010

Summer 2010

"An Upside to the Real Estate Downturn: Stronger Real Estate Firms" – April 14, 2010

Remarking on operating assets, "Keepers are assets that have healthy or predictable cash flow, a positive long-term horizon and high growth potential; Weepers suffer from low quality and cash flow, little long-term value and poor location; Sleepers have good locations with some deferred maintenance, medium-term leases with a high potential cash flow growth and are ripe for conversion to alternative uses."

Summing up the year ahead, "The best approach for coming out of the recession on the upside involves: checking your balance sheet; performing an organizational restructuring; improving lender relations; and going after some great opportunity buys."

Discussing how to find real opportunities, "The banks now own $3 trillion of residential mortgages, $1.5 trillion of corporate real estate loans and $1 trillion of consumer debt. Most of it will be sold to help the banks regain the confidence of regulators. They will start moving these assets by year-end, so get ready!"

Stan Ross, chairman of the board, USC Lusk Center for Real Estate

"Trends in Tenant Construction" – February, 2010

Discussing construction cost trends, "The market will stay volatile for the balance of 2010; labor costs will remain discounted and materials costs will remain flat."

Commenting on who should lead a sustainable project, "Sustainable building is a team sport. LEED decisions need to be made early and tracked often. It’s part of the design and construction process, not a separate meeting." Design-build is making a comeback. People are trying it out as integrated project delivery grows. Interior spaces are getting leaner, reflecting how people work. Large spaces are all becoming one flexible space for reception, eating areas and conference rooms."

Merrell B. Ashley, director, rand* construction corporation

"Unblocking the Liquidity Logjam" – February, 2010

When buying loans, the key is twofold: 1) really understand the collateral and what it’s worth; and 2) understand the borrower and who they are – are they someone with one loan or several? Is there cash flow from other businesses besides real estate?"

Remarking on lessons learned, "Make sure you know who owns the property – LLC’s do get sold. There will be unknowns so price that risk into your bid."

D. Shane Baldwin, CEO, Silverleaf Financial