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Standard & Poor Lower Ratings For Stuyvesant Town and Peter Cooper Bonds
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Tishman Speyer Properties is in a pickle. After making the biggest real estate deal ever when it purchased Peter Cooper Village and Stuyvesant Town in Manhattan, the company took out bonds to cover the cost of 5.4 billion dollars.
However in the meantime the property values have dropped 10 percent on the two landmark communities and efforts to gentrify the communities and reduce the amount of rent controlled apartments faces tough community opposition.
The net result, less potential earnings and the companies reserve funds have been being spent forcing Standard & Poor to cut the bond ratings.
So now Tishman Speyer is caught in a pickle. They are facing higher costs on their bonds and have an impaired cash position so investments in Peter Cooper and Stuy Town will have to be cut back.
Was this New York’s greatest real estate boondoggle? MetLife is looking very smart right now getting this price and getting out of a Manhattan real estate market that is heading south.
And there was an immediate reaction in the real estate world: Tishman Speyer Properties, which controls Rockefeller Center, the Chrysler Building and scores of other properties, abruptly pulled out of a deal to buy the former Mobil Building, a 1.6 million-square-foot tower on 42nd Street, near Grand Central Terminal, for $400 million, two executives involved in the transaction said.
Commercial properties are not the only ones facing problems. On Friday, Standard & Poor’s dropped its rating on the bonds used in Tishman’s $5.4 billion purchase of the Stuyvesant Town and Peter Cooper Village apartment complexes in 2006, the biggest real estate deal in modern history. Standard & Poor’s said it cut the rating, in part, because of an estimated 10 percent decline in the properties’ value and the rapid depletion of reserve funds.
The rating reduction shows the growing nervousness of lenders and investors about such deals, which have often involved aggressive — critics say unrealistic — projections of future income. via NYTimes.com.
Case Shiller Report For July, 2008 Not All Bad
With all of the economic turmoil, negative press, and genuine feeling of pessimism across the country about the real estate market, there are some bright spots as bottoms are being found. Minneapolis turned the corner as has Denver, Dallas, Detroit (OMG), Boston, and Atlanta.
Of course the bubble cities of Las Vegas, Phoenix, LA, San Diego, and Miami are struggling, but that is to be expected. Pricing in these cities are still out of whack even after the horrendous declines for potential homeowners in some and others just are still absorbing huge inventories.
So look at the Case Shiller numbers presented in a slightly different way from how the evening news will. They will lead with the worst while I will show the best we have to offer.
Jun 08 v Jul 08 Jul 07 v Jul 08 Minneapolis 1.93 -13.10% Denver 1.01 -4.70% Dallas 0.78 -2.50% Detroit 0.53 -16.70% Boston 0.27 -5.40% Atlanta 0.15 -8.20% Tampa -0.04 -19.40% Cleveland -0.32 -7.80% Charlotte -0.44 -1.80% Chicago -0.53 -10.00% Portland -0.82 -6.60% New York -1.47 -7.40% Seattle -1.77 -8.20% Washington DC -2.11 -15.80% San Francisco -2.95 -24.80% Miami -3.03 -28.20% San Diego -3.17 -25.00% Los Angeles -3.19 -26.20% Phoenix -4.1 -29.30% Las Vegas -4.36 -29.90% 20 City Average -1.46 -16.30%
Long Island Retail Real Estate Networking Group Finds Success
Slow market getting you down? Here is a great idea for those who are a little web savvy on how to jumpstart your networking in a slow market.
Create a networking group for those up and down the real estate food chain in your community that meets online and offline. The cost is low and the opportunities are endless.
After launching its Web site three weeks ago, The Retail Network has garnered 140 members, drawing not only Long Island’s major retail real estate players but representatives from architecture firms, construction companies and law firms.
“We said, ‘Why don’t we pull in different aspects of retail real estate,’” said Joshua Weinkranz, vice president of the Northeast region of the New Hyde Park-based Kimco Realty Corp., one of the nation’s largest owners of community shopping centers. “Pull in an attorney, strong regional retailers, how about some property service guys who do the sweeping and snow plowing — all the different people who may not normally cross paths. Why don’t we get them together so we can generate business for everybody.”
The three founders of this nonprofit networking group, all executives at major retail real estate firms, said they saw a need to create a networking space specifically for the regional retail industry. via Newsday.com.
The Sky Is Not Falling When Bad Bills Do Not Pass
Today’s actions by the House of Representatives spooked the market, no doubt about it. But the actions they proposed would have put the US Taxpayers behind the 8 Ball and allowed the stupidity of the Wall Street banks to go unpunished.
Sure the market dropping is not fun. 777 is a number for Vegas not the stock market (that is how much the Dow fell today.) But that is not the end of the world.
Economist Brian Wesbury, of whom I am turning into a big fan, has this to say.
The isolated storms in housing, finance and energy, are now being exaggerated by excessive government intervention (on a knee-jerk basis), mark-to-market accounting and panicky words from political leaders. As a result, consumers are pulling back, credit is being squeezed even to solid, well-run businesses and the economy is being threatened by this spreading panic.
The housing market has struggled, gas prices soared as oligarchs and despots have manipulated oil supply and a surging worldwide demand sucked up inventory. But the economy has not fallen into a recession even after the media has talked it down. In fact, Brian makes another great point.
Never in history has a drop in consumer confidence caused a recession. But that does not mean there won’t be a first time. It could happen in the next few months and we would expect to see some very negative data on economic activity. But this would be followed by an offsetting increase in activity following the psychological slowdown.
Productivity is still booming, and so are exports, the Fed is exceedingly accommodative and tax rates have not been hiked. Moreover, oil prices are below $100 per barrel. Finally, all it would take to fix financial market problems today is a temporary suspension of mark-to-market accounting for a targeted set of illiquid assets.
In other words, any economic problems that the US faces in the next few months or quarters is temporary. Financial markets have priced in Armageddon, and as a result still present one of the greatest buying opportunities of our lifetimes. via First Trust.
So Wall Street threw a hissy fit that they were not going to get the taxpayer pot of gold at the end of the rainbow. In the long term the country may be much better off without a 700,000,000,000 dollar liability.
European Governments Attempt Rescue Of Fortis, Hypo Real Estate and B&B
Our politicians have made this economic crisis seem like a national problem, but reports coming in from overseas are showing that it is an international problem. The financial markets tried to create a new tool to manage investments in debt that was bad.
And that tool failed, it happens and now we are paying for it. But this problem is a world wide one, not limited to the United States.
European governments have today come to the rescue of Fortis, Bradford & Bingley and Hypo Real Estate as credit conditions continue to devastate the banking sector.
The governments of Belgium, Luxembourg and the Netherlands have stepped in to inject €11.2bn into Fortis after the banking and insurance group’s share price plunged in recent days.
Belgium has agreed to invest €4.7bn in the Belgian-Dutch group, while the governments of the Netherlands and Luxembourg are to spend €4.0bn and €2.5bn, respectively, in the bank’s units in those countries.
As part of the deal, which was coordinated by the three countries and European Central Bank chief Jean-Claude Trichet, chairman Maurice Lippens is to step down. The new chairman will be recruited from outside the company in consultation with the Belgian government.
“The actions taken by the Belgian, Luxembourg and Dutch governments are a sign of confidence in Fortis and of comfort to customers and all other stakeholders alike,” said Fortis chief executive elect Filip Dierckx.
“These actions ensure the financial strength and stability of our company going forward,” he added.
Real Estate Agents Avoiding High Cost Of Gas Selling On Bikes
When you are a real estate agent in a slow market you need to focus on your strengths. Some enterprising real estate agents in Portland, Oregon have gone one step further. They have recognized that the green lifestyle is popular and have incorporated it in their sales techniques.
They sell real estate by bicycle.
Yep, instead of driving around in their Mercedes Benz, or even their Prius, they are targeting those who love to bike around town and are showing homes using their bicycles. And they are successful doing so.
So agents, when you look around wondering why you do not have generic buyers clamoring for your attention, why don’t you focus on a specific type of buyer and become an expert? Those that share a passion will much more likely to buy from those than the generic real estate broker.
Some even show houses exclusively by bike, wheeling through the neighborhood with potential buyers to show off bike lanes and bike-focused businesses and repair shops.
Clad in a purple helmet with plastic flowers dangling from her handlebars, Kirsten Kaufman, of Portland, is part of a new generation of agents eager to replace the stereotypes of hauling clients around in fancy sedans or sport utility vehicles.
The mother of three started hosting bike tours earlier this summer, doling out energy bars and apricots to a growing tail of clients whose passion for pedaling weighs heavily in their choice of homes. Some are hard-core cyclists. Others are moving into the city to avoid increasingly expensive and onerous commutes.
“It’s becoming more common to see families committing to driving less,” Kaufman said. “I think it’s a part of the market that will continue to grow as gas gets more expensive.” via Seattle PI
Will Fire Sprinklers Be Mandatory in New Homes in 2011?
At a recent meeting of the International Code Council a motion was approved to make fire sprinklers mandatory for homes in 2011, a scant 2 years away. The mandate will add the added expense to new home construction for 1 and 2 family homes to gain an additional layer of safety in the event of a fire.
Sounds noble, right?
But what the cost. A study shows the cost of installation of a sprinkler system will add another $1.61 per square foot of space, not to mention the cost on inspection and maintenance over the life of the system. And what happens when the roast starts smoking, will the sprinkler go off?
If the risk of water damage from a faulty system is added in, will insurance premiums spike? Or will the sprinkler system actually lower those premiums as fire damage will be reduced?
These question should be answered before another unfunded mandate is pushed by an anonymous regulatory agency on American homeowners.
Supporters of the code change say sprinklers increase the amount of time people have to get out their homes during a fire by preventing flashover, which occurs when the temperature in a room reaches a point where all combustible materials burst into flames. “This is just the most wonderful step forward because it’s going to ensure that more families have access to the one technology we know can save their lives in a devastating home fire,” says Meri-K Appy, president of the Home Safety Council, a nonprofit in Washington that promotes prevention of accidental home injuries.
But the National Association of Home Builders says there isn’t enough evidence to support making sprinklers mandatory, which will also increase the cost of the home and require maintenance by homeowners. “We disagree with this mandate, but our members will continue to advocate for cost-effective construction and life safety measures through the model code process,” NAHB President Sandra Dunn said in a statement. via WSJ.com
The Darkness in Saint Louis - Number 3 of Top 10 Haunted Houses in America
The Darkness is considered on of the best Haunted Houses in the United States. If you are in the St. Louis, Missouri region and like to be scared, this is the place for you. The combination of technological special effects and amazing design will scare the most jaded of Halloween connoisseurs.
With 2 stories of newly renovated fear, The Darkness provides thrills and chills. The owners decided not to rest on their reputation but have reinvested in all new special effects. Here is the site described on their website.
The Darkness has undergone a TOTAL renovation bringing the fear level to the ultimate FRIGHT. Start on the first floor and enter a forbidden city of the dead. Once inside the all new ‘City of the Dead’, you encounter everything from a massive 15 foot tall Minotaur to a full sized attacking T-Rex who will come within an inch of your body with snapping jaws ready to take your head off. Then, come face-to-face with head hunting savages, massive monsters, attacking snakes, and more within sets more realistic than any Hollywood movie.
Once you make it to the second floor, be ready for an all-new experience starting off with an old witch’s swamp house full of deadly voodoo. The entire swamp house is moving on a sea of swamp water infested with swamp monsters. Rocking back and forth, you’ll throw off your entire equilibrium. This set is a technological marvel that was featured on the hit television show ‘Modern Marvels’. After the swamp house, you walk across rope bridges that challenge your skills…Careful! Past the rope bridge, you are thrust right inside one of the most incredible graveyards ever created filled with attacking werewolves, and ghoulish ghouls who will raise out of the grave right before your eyes.
The thing that impresses me about The Darkness and it’s owners is that it does not rest on it’s laurels. They have made major improvements for the 2008 season and are in the midst of adding 20,000 square feet of ghoulish terror for 2009. So coming back year after year will never get boring!
The Darkness is conveniently located near the Soulard Market at 1525 South 8th Street in Saint Louis just off where Interstates 55 and 44 come together. Tickets are $17 for adults and $13 for children. They also offer a bunch of combination plans with their sister (evil Stepsister?) sites Speed and CreepyWorld.
The Darkness Haunted House Coupons
The Darkness Haunted House Directions
The Top 10 Haunted Houses in America:
- ,
- Netherworld, Atlanta, Georgia
- The Darkness, St. Louis, Missouri
- Arasapha Farms and The Bates Motel in Gradyville, PA
Rocky Point Haunted House, Salt Lake City, Utah(Closed)- Shocktoberfest in Reading, Pennsylvania
- Frightworld in Buffalo, New York
- Horror Hotel in Chatfield, Ohio
- Dead Acres in Columbus, Ohio
- Erebus Haunted House in Pontiac, Michigan
Great Video on How Subprime Crisis Happened
Watch, pause when it is too fast, and then watch again.
A montage on the economic crisis that is worth the price of admission.
Another Voice For Mark to Market Reform
I have been engrossed watching the political machinations going on as one of the largest spending projects get’s the bum rush through Washington in the form of a financial bailout for Wall Street.
Fortunes will be made on the back of the honest taxpayers in the country.
But there are some smart people recommending the Mark to Market plan that would provide cover for the financial market and provide a logical solution without bankrupting the country.
Of course there is no pork in it so Washington has very little interest in it.
Here is another report on Mark to Market by First Trust Partners. It is in PDF format but a very good read.
And, third, it seems clear that much of the current crisis has been exacerbated by mark-to-market accounting, which has created massive, and unnecessary, losses for financial firms. These losses, caused because the current price of many illiquid securities are well below the true hold-to-maturity value, could have been avoided. The current crisis is actually smaller than the 1980s and 1990s bank and savings and loan crisis, but is being made dramatically worse by the current accounting rules.
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