The one thing we know is this: markets hate uncertainty. And after reading this CoStar piece about Dodd-Frank I can see why there is a lot of angst and uneasiness among some investors in the commercial real estate market. It is going to take time -- and a lot of manpower and legal analysis -- to sort through yet another behemoth set of laws, rules and regulations. While I am not a deal guy, here's what I am thinking, and I encourage you to critique me or even tell me I am dead wrong.Pricing and cap rates will have to be lower than they were to sustain any good returns on deals. ...
Where's the private equity money?
According to this nicely-done New York Times post, not in real estate:Private equity real estate fund-raising fell in the second quarter to its lowest level since 2004, suggesting that a recovery has yet to take root in the investment property market. For years you kept hearing about everyone having "dry powder" but not using it. Is that like the Mutual Assured Destruction theory of the Cold War? I think the story correctly states that many lenders are wary to lend money to PE-backed concerns. But it could also be --as the piece correctly mentioned -- that these entities raised...
Some thoughts on broker/lawyer relationships
Why are so many brokers and lawyers mortal enemies? I cannot being to tell you the stories I've heard about broker x and lawyer y fighting with one another to the detriment of a deal. I think there are two main reasons for this: (1) lack of communication and (2) interference.I had a great conversation with broker and fellow blogger Duke Long yesterday that made me want to write about this.In many deals if not most, brokers are at the table before the lawyers, negotiating the business terms and working the deal. That said, smarter client in my humble opinion get legal counsel...