Are we in a cycle or a reset?

Here's a thought provocative enough to get me to post on a Sunday. RevPAR and occupancy are down so much at hotels that at least one industry mogul says this isn't cyclical:What the U.S. hotel industry is experiencing today isn’t simply the downside of a highly cyclical business, emphasizes Thomas Magnuson, but rather a massive fundamental shift. “It’s a reset,” declares the CEO and principal of Magnuson Hotels, ranked by Inc. Magazine as the world’s largest independent hotel group.So combine occupancy drops with supply increases and you have a whole new paradigm. Now for consumers that may...

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More on restructuring guidance - a good start but not a panacea

As I mentioned in my last post, I thought it was about darn time the government came out with some guidance on restructuring CMBS to allow modifications to individual loans in the pool without having to throw everything into default and the special servicer.That doesn't make this move, however, good, a cure-all for the market. As an excellent story in Retail Traffic points out, this just might be a delay to solving the fundamental problem rather than a solution. Think of it as, perhaps, a more complex and less personal extend and pretend? But the hope is not completely illusory -- but modifying...

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Treasury issues CMBS restructuring guidance -- about time

Here are relevant stories: here and here . The gist? "The guidance would ease requirements for collateral and other guarantees in many cases. Borrowers in investor pools known as Real Estate Mortgage Investment Conduits would be allowed to refinance some loans without paying tax penalties."Why should this have happened sooner? Pain, that's why. As the WSJ notes,"Until now, tax rules have made it difficult for borrowers who are current on their payments to hold restructuring talks with the servicers of these bonds. Developers and investors complain that only those who are delinquent can talk...

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I guess it's not impossible - judge rules against earnest money refund

I've written here before about buyers and borrowers raising defenses of impossibility or impracticability of performance or even force majeure under contracts because of the global economic situation. One of those deals was at 180 North LaSalle, where Younan Properties put down $6 million in hard earnest money to buy the building from Prime Group Realty Trust. Younan could not close and sued to get back the deposit.Judge Maki in the Cook County Circuit Court has told Younan that it loses. “The purchase and sales agreement is a promise to purchase this property for a set price on a set date...

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Surviving the market - take plenty of water!

Forbes has a good article out on the state of the market captioned Commercial Real Estate: Big Troubles, Small Bailout. The gist is that there is a lot of potential trouble facing the market and government will not be the solution.My favorite quote from the story is this one:California billionaire and Colony Capital Chief Executive Tom Barrack talked with Forbes in July about the struggle for survival in a downturn. "The object of the drill for everyone in commercial real estate--and this is everyone in the world--is just get to the other side of Death Valley. If you can make it to the other...

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A shameless double plug

John Reeder was kind enough to profile me as one of his top 100 real estate tweeters at his fine blog, Real Property Alpha. I had a lot of fun answering the questions. By the way, if you are not reading John's blog, why not? He does an excellent job with it and I commend him to yo...

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