Blog because you like it

Just some personal thoughts posted elsewhere...Blog because you like it or consider it a good exercise in keeping current. Consider the additional writing, speaking and clients (or declined business) a fringe benefit. Thanks to the Law Blog for pointing this out.

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Steve Jobs and introspection about oneself

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As the whole world knows, Steve Jobs died . And it wasn't a surprise. He'd been battling illness for years. He was the Thomas Edison of our era . But let's go beyond that. Why?  Because of this famous Stanford commencement speech:  Several quotes stick out the most, and they have been repeated ad infinitum all over the Internet and the news. I will repeat them anyway, taken from The Stanford Daily's text of the speech: You've got to find what you love. And that is as true for your work as it is for your lovers. Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven't found it yet, keep looking. Don't settle. As with all matters of the heart, you'll know when you find it. And, like any great relationship, it just gets better and better as the years roll on. So keep looking until you find it....
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Cap rate spreads - making sense?

I really like this analysis by David Lynn posted at NREI. Why? Because it makes sense to me. At one point, the numbers were insane. People buying deals at a 4 cap with the unfounded expectation that the bubble would go on and on and on smelled of tulips in Rotterdam. And yes, the frost came. But look at the charts now, if you happen to be a chart person. Add in your risk premium and real estate is slowly starting to make sense again. Buy at a 10, sell at a 8 is the maxim I have mentioned here before. And as the caps reach reasonable levels, real estate's making sense again. That is the beauty of cycles. The thing is - it could still get better. But I agree with the analysis that smart money will start jumping in again with relatively "safe" deals - reasonable interest rates, LTVs and expectations.
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GGP and SPEs - bankruptcy remote, bankruptcy proof?

Now that I have a few minutes, I want to comment on a great story in Friday's Journal about the General Growth Properties bankruptcy. When GGP filed its Chapter 11, it also dragged 166 individual malls with it. How so? Each mall is owned by a special purpose entity, demanded by its lenders to try to prevent what actually happened. And this could have major ramifications throughout the real estate world. Why? Because (a) lenders thought the structure of the deals would prevent this from happening; (b) GGP wants to take the cash flow from the deals into general operating funds for the company rather than into paying these otherwise-performing loans -- in short, use the good malls to prop up the dogs; and (c) get some leverage in the bankruptcy. For those of you saying, "Huh?" here's an explanation: In past years, to get the malls' mortgages, General Growth had set up 166 "special purpose entities" whose sole purpose was to borrow money. SPEs are attr...
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