The Dirt Lawyer's Blog Archive

It isn't just Shorenstein with dry powder. Here comes Blackstone back for more: they've raised another $10.9 billion for real estate. What is the next target? If you are in the business and this is not telling you something, then you might want to change careers. Hold on tight.

This Fortune profile of Harry Macklowe is really fascinating. It highlights the ups and downs of a long career in the real estate business. The story says you either love him or hate him. I don't have feelings either way, but the guy has big platinum ones for the risks he takes. According to the story: Now the 70-year-old developer is in the middle of a maelstrom of a different kind. This time it's in the credit markets. Thanks to his personally guaranteeing a $1.2 billion loan last winter, he may lose billions of dollars in real estate, his homes in Manhattan and the Hamptons, his contemporary art collection, and even his beloved yacht. This would be a bitter end to the career of one of New York City real estate's most polarizing figures. And here I am worrying about a small loan for a start-up company. They say not to worry about timing the market, but sometimes timing is everything. Take Sam Zell and the EOP deal. Was that perfect or what? Again, the story sez: I...

The weather is holding for now, so I'm going to be brief today and try to enjoy the weather while I can. (I also know I have several deals that will keep me chained to my desk all week next week.) I apologize in advance for the shotgun approach to blogging and the lack of analysis. First, Jordan Crouch has a great explanation for beginners on CMBS loans. Great job. Call it CMBS for Dummies. Next, check out a good story on the ripple effect of the Blackstone-EOP deal at Commercial Property News . The moral? We may not see the likes of it soon because of the credit crunch, but real estate people now know that at least theoretically, no deal is too large to do. (But would you want to?) There is also some good information on the flips and the "Blackstone effect" of rising rents in some markets. CoStar's watch list for this week contains a fairly lengthy summary of bank views on the lending market as it stands today. After only eighteen months of ownership, th...

This is an interesting theory I came across today. The gist of it is that deals have been done at high prices (the so-called "Blackstone Effect" from its EOP acquisition) under the theory that you are buying the property for its future value based on the assumption of continuously rising rents. I call that kind of thinking risky, except maybe in the scarcest markets (Manhattan, maybe downtown SF, central London, etc.) and perhaps even there to boot. In the 1990s everyone thought rents would never go down and that demand would always exceed supply. El-wrongo. Now this is a completely different market from fifteen years ago, but as Santayana wrote (a phrase that, alas, Jim Jones co-opted in his tragic camp in Jonestown), "Those who cannot remember the past are condemned to repeat it."

As expected, it did not take long for GE to close on its acquisition of the suburban portion of the Blackstone properties acquired in the EOP deal. Unlike other deals, only one property was flipped, and that was because it was in Bannockburn, which is outside GE's target property area. It is nice to see that GE is looking at a mid-term hold on these buildings. They have high occupancy and should remain that way. Meanwhile, back downtown, two different JVs led by John Buck Co. and Golub & Co. have pulled office buildings off the market after negotiations with two California based companies to acquire 200 W. Monroe and 225 W. Washington. Crain's reports that the Buck deal had a signed LOI (glossary: "letter of intent" -- usually but not always non-binding) but pulled out anyway. Perhaps both sellers were not getting the returns they expected. What stuck out in this story the most is a quote from Zara Younan, principal of the eponymous Younan Properties, Inc....