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May 14, 2012: Freid of Boston Realty Advisors and Nahigian of Auburndale Realty Co. handle lease for Hammond Pond Dental Associates, featured in the New England Real Estate Journal; Read More Download PDF

April 30, 2012: BRA names d'Hemecourt partner and president of retail real estate division, featured in the New England Real Estate Journal; Read More Download PDF

April 27, 2012: Boston Realty Advisors completes three leases in a single building, featured in the Banker and Tradesman; Read More Download PDF

April 23, 2012: Two Cambridge apt. buildings sell for $16M , featured in the Boston Business Journal; Read More Download PDF

April 20, 2012: Boston Realty Advisors Negotiates $16M Harvard Sq. Portfolio Trade, featured in the Real Reporter; Read More Download PDF

Market News

May 22, 2012: Development Won’t Pick Up For At Least Two Years, RECon Attendees Predict

May 22, 2012: Retailers, Developers Seek to Exchange Best Practices as Globalization Ramps Up

May 22, 2012: Retail Industry Is Optimistic, But Still Wary

May 22, 2012: Walmart Blazes a Trail for Other Value Retailers in Expanding Internationally

May 22, 2012: Macroeconomic Concerns Alter Retailer Global Expansion Strategies

May 21, 2012: Retail Landlords Sigh in Relief as Leasing Activity Gains Momentum

May 20, 2012: Attendees Expect 2012 RECon to Be the Best One Since 2007

May 19, 2012: Let the Dealmaking Begin

May 18, 2012: Mega Mixed-Use Development Planned for California Town

May 17, 2012: Lifestyle Centers Launch a Comeback

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Weekly Thoughts From Jason S. Weissman:

Tishman Hands Back Keys

-and-

3 Fundaments of RE Investment

In a show of the times, Tishman is "handing back the keys" to the lenders for Stuyvesant Town, as reported in today’s Wall Street Journal cover story. In 2006 Tishman & BlackRock paid $5.4B. Some say the asset is worth $1.8B. Click the link below to read the story:
http://online.wsj.com/article/SB10001424052748703415804575023483097973538.html?mod=WSJ_hpp_LEFTWhatsNewsCollection

Many clients of our firm have asked, "has the business of real estate private equity and real estate syndication changed forever?" My answer to the questions is answered in the dialogue below:

How many real estate firms do you know of that made top-of-the-market acquisitions from 2004-2008? Many! These groups assumed that income revenue would simply increase by 2% or 3% per annum and that their assets would continue to increase in value. The revenue model of these syndicates was not solely predicated on capital appreciation, but also on fees i.e. Acquisition Fee’s, Asset Management Fee’s, etc. etc. Did anyone look at historical bell curve's on commercial real estate valuations over the last 40 years? Typically, the "debt" leverage for these acquisitions would be at least 80%. With average commercial real estate valuations off by at least 40%, all equity in top of the market acquisitions has generally been eroded.

So, as I pose the question, has the real estate business changed forever? I don't think so. This process is simply a recalibration of the marketplace. For all of the past real estate investment shops that will fail in the next three years, new firms will start with fresh balance sheets and will hopefully be mindful of market cycles. My final comment on the issue is the following: Real Estate investments are illiquid and are really meant to be long term investments. The real estate investment shops that were hoping for appreciation and rental rate growth were caught in a game of speculation.

The most successful real estate investors, who seem to never loose, implement the following strategies: (not investors driven by asset management fees)

1) Buy with low leverage
2) Have a long term investment horizon
3) Hope for the best, BUT expect for the worse with deal underwriting.

For example; operating costs, rental vacancies, lease absorption time, are always more than expected!

Take a look at last years archived market report to see how my predictions and market read were both spot on.

BRA Market Report PUBLISHED by me December 15th, 2008
http://www.bradvisors.com/news_item/pdf_file/121/Winter0809Email.pdf

I am the Founder and Principal of Boston Realty Advisors. Please check in weekly to review my blog entries. I value client/reader feedback!

Posted at 01/25/2010 12:49 PM by Jason S. Weissman

Categories: Real Estate Investment, Boston Real Estate, Lending

Comments

Thanks for your comments. You suggest low leverage as a effective strategy not to loose.BUT, what makes the real estate so attractive is ones ability to leverage it! That's where big returns come from. My thought RE investment is dead until leverage comes back!

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