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News

The Good News from Kevin Maggiacomo

Thursday, August 11, 2011

The last couple of weeks have been a whirlwind of ups and downs. Kevin Maggiacomo, CEO of Sperry Van Ness International, has written his thoughts regarding what could be the silver lining of all the turmoil. His thoughts are below and can be found at www.maggiacomoblog.com.

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Recent events in the market, including the drawn out debate over the budget ceiling, Friday’s downgrade of the US credit rating and today’s downgrade of Freddie & Fannie by Standard & Poor’s, coincide with new data that show the broader economic recovery has slowed in recent months. Bet I’m not telling you anything that you didn’t already know.

These developments, alongside heightened volatility in stock markets, have obviously prompted concerns about the resilience of the commercial real estate recovery. In assessing what all of this means for the investment outlook, our clients are looking to us for leadership and a more balanced, long-term assessment of the future. Along those lines, and while I could certainly fill this post with a summary of the downside risks stemming from recent events which have recently imbued the blogosphere, the following is a different but pragmatic take on the road ahead – the market is currently sensitive to the downside risks, but it is also prone at this juncture to discount positive information. There is some good news, which stands apart from the cacophony of recently sounded panic alarms.

On the economic front, there are indications of continuing resilience. Among them, the details of last Friday’s employment report have been lost in the discussion of the downgrade. That report shows the private sector adding over 150,000 jobs during July, easily beating economists’ projections. And while job growth needs to improve further, it is significant that businesses added a meaningful number of jobs even in the midst of the budget crisis. Corporate profits have rebounded, more than doubling from their recession levels and even surpassing their pre-recession peaks. Those profits will feed hiring once a sense of long-term normalcy returns to the market.

Closer to my world, trends in commercial real estate investment markets suggest a degree of resilience in the face of market disruptions. Some of the key trends to consider are as follows:

Investment Activity Continues to Increase

CRE property sales continued to increase in the second quarter, hitting levels comparable with sales during 2008. Even as the economic news has become more tentative, activity in July remained strong. The large coastal markets remain the most active, but rapid declines in cap rates in these locations are supporting a stronger value proposition in secondary and tertiary markets and for relatively smaller properties. Spillovers into the middle market have been slower in coming, in part because sales depend on the availability of financing, but that piece of the puzzle is also falling into place.

Credit Availability is Improving

The latest data show that delinquency and default rates at the regional and community banks that account for a large share of mid-size and small property lending have come off their peaks. As the stress from legacy loans has become more manageable for many institutions, a large number have actively returned to the market in making new loans. These banks are less active in the major metros, where lending by foreign banks and other lenders is driving outcomes. Instead, they are relatively more active in the markets where large institutional lenders and investors are not. CMBS lending is also contributing to credit availability for mid- and small-tier borrowers. We expect CMBS to be an important contributor to overall credit availability, in spite of recent bumps in the road for issuers.

As for today’s downgrade of Fannie Mae and Freddie Mac, this probably means higher costs of capital for these institutions, in spite of their unique relationship to the government under their conservatorship arrangement. Not receiving much attention over the last 3 days, however, is that strong fundamentals in the apartment sector mean that other sources of credit are eager to finance investment activity. This is clearly in evidence with banks, which Chandan Economics find have increased their net apartment lending in 2011. Keep in mind that residential mortgage rates will generally rise if Fannie and Freddie’s costs go up. That supports apartment fundamentals, supporting non-GSE lenders’ favorable assessments of the sector’s risk profile.

S&P Downgrade a Wake Up Call in Washington

I’m oversimplifying, but the U.S. debt downgrade, in my opinion, wasn’t much about the ratio of public debt to GDP or any other metric for that matter – the downgrade wasn’t rooted in math, or with respect to the U.S.’s ABILITY to service its debt. Rather, the downgrade was about our government’s WILLINGNESS to do so. The chaotic two month’s in Washington and the partisan rancor which transpired was significant, and spoke as much to the likelihood of default as anything.

Perhaps most important, when issued, the S&P downgrade offered very little in the way of new information about the quality of US debt. More than anything, it spoke to the character of the U.S. government. Dare I say that this may trigger a new, more levelheaded approach to governance and policymaking? With many of the pieces of a resilient recovery in place, stronger signals from our elected officials that the rules of business will normalize and that our countries’ challenges will be addressed in a timely and meaningful way, this could be the best legacy of the ratings rebuke. Until then, be on the lookout for continued improvements in credit availability, the debt capital markets, and other positive economic indicators which fuel the resilient commercial real estate marketplace.

I’m not being Pollyanna, but there is some good news to consider of as of late.

Interview with CRE Attorney Jeff Vinzani on Commercial Lease Clauses

Thursday, July 14, 2011

Listen to internet radio with Howard Kline on Blog Talk Radio

Great interview on commercial lease clauses with Jeff Vinzani (@vinzani).

Top Markets to Watch

Monday, June 06, 2011

via the Maggiacomoblog.com with my comments:

For years, Sperry Van Ness has issued our annual Top Markets to Watch report. Broken down by product type, this report details which markets are poised to take advantage of emerging trends.

What we saw in Q4 of 2010 was an investment rebound in the coastal markets where trophy properties in the major metropolitan areas saw great demand and competition. The affect of this competition is sharply lower cap rates in those markets giving investors the motivation needed to again look at secondary and tertiary markets for better yields. (Parenthetically, this is music to my ears as I hail from tertiary-central!) Add to this a slow but noticeable loosening of credit, and buyers are reengaging across a much broader geography.

The metros included in this year’s Top Markets to Watch lists reflect this evolution and are as varied as today’s investors. Some markets and property types will appeal to buyers eager to compete aggressively for highly liquid properties. Other markets will appeal to discerning investors with an eye for long-term value or the turnaround potential of a distressed asset. The common thread, every market in this year’s lists offers a unique opportunity for investors to capitalize on commercial real estate’s resurgence.

Please click here for the latest edition of the Advisor Magazine which contains this report.

Is your market seeing this resurgence? Let us know!

Distressed Assets | Loan Sales - Force To Be Reckoned With?

Wednesday, June 01, 2011

Last week I had the distinct pleasure of attending not only the ICSC ReCon convention, but also the Sperry Van Ness National Conference on the heels of it. It was a fantastically done conference and great content abounded. One of the big take-aways was from Pat Blount, president and founder of Benewolf which is a note sale platform. His insights into the state of distressed assets and how his platform of loan sales plays a role was particularly relevant and timely. His thoughts on last week are below:

Sperry Van Ness A Distressed Asset Sales Force To Watch

By Pat Blount

If you are fortunate you get to be involved in the development of a cutting edge business idea once in your life. If you are really lucky you get to do so during a paradigm shift in that industry. So call me Mr. Lucky.

I had the opportunity to spend two days last week speaking to and getting to know almost 200 of the 900+ real estate professionals associated with Sperry Van Ness Commercial Real Estate Advisors. This lucky break for me began last fall when I entered into an alliance with the 65 member Sperry Van Ness Asset Recovery Team. The concept for the alliance sounded quite simple; I would offer SVN Asset Recovery Team members loan sale advisory capabilities via my company Benewolf and they in turn would afford...read more.

Video Blog - Tenant Representation

Saturday, May 21, 2011

Lessons from the Corps - Part 2

Friday, May 20, 2011

I've spent many minutes over the last couple of days thinking about preparedness and swagger and how connected these to qualities are. It is interesting to me that Marines do 2 things: they go to war and they train. At a bottom line level, that is all they do.

Marines train ad naseum! And they do so in conditions as close to war as possible so that the Marine becomes accustomed to performing at a hero-level under conditions of extreme stress. Boot Camp is like this. For the first 2 weeks, I was completely disoriented. Nothing was said that wasn't yelled. Drill Instructors talk so fast that they can be hardly understood, and regardless of what I did, it was not good enough or fast enough. Then an interesting thing took place on the 15th day - I adjusted. All of the sudden, that level of stress became normative. My wits returned to me, and I went from just trying to hang on and survive to seeing how I could push through and excel. It was a turning point for me and a vivid memory. I had found confidence and swagger.

It is clear to me now more than ever that my business is much like this. I should be training/preparing or I should be at war/advising/serving my clients. We market our tails off to create presence and get meetings and appointments, but are we ready to perform if all the marketing pays off? We must be prepared. Our ducks need to be in a row. We must train, train, train so that when it is time to stand before that client, we can do so with a swagger that cannot be faked or duplicated. Arrogance is when you fake it. Swagger is supreme confidence in your preparation and ability to come through for your client's best interest. And that is when things get fun!

And to leave you with a parting gift for reading my ramblings, enjoy this short news story. I love it!

Don't Mess with the Marines!

Belief

Thursday, May 19, 2011

Lessons from the Corps - Part 1

Thursday, May 19, 2011

I have a pretty sweet situation at my office. I share the office with my dad. Technically, it is his office, and when I bought the real estate company from him a while back, I stayed. So his office is still next to mine, and he is still an incredible resource to me. Frankly, I just like seeing him nearly every day. As is often the case, as the day winds down, I find myself in his office, or he is in mine - and we chat. Today's chat brought back a memory.

After a Marine graduates boot camp, he'll go to SOI - the School of Infantry. 6 weeks of hell for the true ground-pounder, and 17 days of the same for the rest of us. When I graduated SOI, I had a day lay-over before my flight took me to California the next day. So for the first time in months, I had some free time to walk around base. I made two huge rookie mistakes that day. First, I was walking with something in my right hand which was a big no-no because you can't salute. Second, I walked by a Lt Colonel without noticing him. I was sunk.

Some Gunny standing next to the Colonel got ahold of me and ripped me a new one, and while he had me, he inspected my uniform. Without going into detail, I was not prepared for that spot inspection. That moment taught me something that I was reminded of today: be prepared. From that moment to my last day in the Corps, I never failed another inspection. I prepared every day as if I would have a spot inspection from some random Gunny, and I was determined to be ready.

So here is my take away from my chat with my dad today. Am I prepared now? If the big fish walks into my office, am I at the ready? Are you? What do you have better to do than prepare for the moment that you are working for?

And not only should we be prepared, but being prepared breeds confidence. My dad used the word swagger today, and that is a great way to describe most Marines. They are so prepared and trained, that they walk around with supreme swagger. It is sometimes awe-inspiring. Whether you are a commercial real estate practitioner like me, or not, confidence and swagger are game changers.

Do you have swagger? If not, what are you going to do to get it?

Who Is Influencing Perceptions About the CoStar/LoopNet Deal?

Tuesday, May 17, 2011

CoStar made huge waves last week with their announcement that they are buying LoopNet. Industry thought leader JC Goldenstein, founder and CEO of CREOpoint.com, shares his thoughts regarding this news and the buzz that it has created in the twittersphere.

by JC Goldenstein

Recently seen online: “CoStar to Buy LoopNet in $860M Deal. Wow. Headlines Used to Only Be About Both Companies Suing One Another…Hello @Google. Are you building a competing #CRE listing solution?”

As expected after a recession, the big continue to get bigger. Further to recent deals involving ARGUS Software, DTZ, Newmark and ProLogis, CoStar announced on April 27th an agreement to acquire LoopNet for $860m.

Having recently founded a company...[READ MORE]

What do you think?? I dare you to comment!

What We Can Learn From Bill Gates

Monday, April 11, 2011

Today, my dad sent me one of those emails that circulates the earth. You know the ones..."if you agree with this pass this on to all your contacts. If you don't then bury your head in the sand and take a deep breath!" That line always makes me laugh.

I rarely read these emails, but my dad never sends them so I checked this one out. Supposedly, Bill Gates gave these nuggets of wisdom at a high school graduation. Funny thing is, the email also uses the word 'recently' a few lines before it mentions a 'car phone.' So, knowing that this could have been recycled over the last 10 years and accredited to many different authors, it still had me saying 'Amen."

Now without further ado, here are 'Bill Gates' 11 Rules of Life:

Rule 1: Life is not fair - get used to it!

Rule 2: The world doesn't care about your self-esteem.

The world will expect you to accomplish something

BEFORE you feel good about yourself.

Rule 3: You will NOT make $60,000 a year right out of high school.

You won't be a vice-president with a car phone until you earn both.

Rule 4: If you think your teacher is tough, wait till you get a boss

Rule 5: Flipping burgers is not beneath your dignity.

Your Grandparents had a different word for burger flipping:

They called it opportunity.

Rule 6: If you mess up, it's not your parents' fault,

so don't whine about your mistakes, learn from them.

Rule 7: Before you were born, your parents weren't as boring

as they are now. They got that way from paying your bills,

cleaning your clothes and listening to you

talk about how cool you thought you were

So before you save the rain forest

from the parasites of your parent's generation,

try delousing the closet in your own room..

Rule : Your school may have done away with winners and losers,

but life HAS NOT. In some schools, they have abolished failing grades

and they'll give you as MANY TIMES as you want to get the right answer.

*This doesn't bear the slightest resemblance to ANYTHING in real life.

Rule 9: Life is not divided into semesters.

You don't get summers off and very few employers

are interested in helping you FIND YOURSELF.

*Do that on your own time.

Rule 10: Television is NOT real life.

In real life people actually have to leave the coffee shop and go to jobs.

Rule 11: Be nice to nerds.

Chances are you'll end up working for one

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