A Letter From The Inside
Here’s a letter from an established real estate investment firm in the city to its investors that landed in our inbox yesterday. It’s quite an interesting snapshot of where the various parts of the market stand, especially when it comes to financing. Of course, it was penned before yesterday’s failed vote. Although many of you…
Here’s a letter from an established real estate investment firm in the city to its investors that landed in our inbox yesterday. It’s quite an interesting snapshot of where the various parts of the market stand, especially when it comes to financing. Of course, it was penned before yesterday’s failed vote.
Although many of you may have experienced extreme difficulties and declines in your stock portfolios and the newspapers report daily on the dire problems with the housing market, our experience in the real estate rental business and the New York coop and condo market is not so extreme. Generally speaking our tenants continue to pay their rents and business continues in a more or less normal fashion. Although we are seeing more delinquencies than usual across our portfolio and we are carrying a greater number of residential vacancies than last year, it is fair to say so far the effects we have seen have been more consistent with a typical downturn in the economy and not more dramatic than that.
Given the current situation in the credit markets, we do anticipate having a more difficult time when seeking refinancing quotes, but we expect to be able to successfully resolve our various financing requirements. So far, our lenders have been negotiating normal mortgage extensions on appropriate market driven terms and at the moment, we do not foresee a problem in this area at least through the end of 2009…This is not to say we have not faced any problems with certain of our properties. We have found it difficult or impossible to arrange debt for new development and/or condominium conversion projects. The market is very reluctant to finance for-sale housing projects. As a result, we have put several new construction or conversion projects on hold and will continue to do so until the market returns to a more normal situation. In one case we even cancelled a deal and took a loss on our contract deposit rather than accepting inferior and expensive financing that would have strained our resources in an inappropriate manner.
Lechacal that is a pretty grim picture of the Wall Street scene. not that I have any info to contradict it. So glad my life is not like that.
All I know is that the governemnt did nothing back in 1929-32 and it resulted in the worst financial collapse we have ever seen. It took government action to finally pull us out of the Great Depression. Specifically the Japanese government’s decidion to bomb our fleet at Pearl Harbor.
The congress has to put aside its bickering and do something.
Story on Bloomberg now how the House members are getting flooded by calls from constituents telling them to pass the damn thing after they saw what it did to their stockholdings yesterday. A complete 180 degree turnaround in sentiment!!!!!
“My brother has a very high position on WS and I have been with a lot of his friends.”
So you’re that kind of sister, are you?
Idisagree, Lechacal is correct. My brother has a very high position on WS and I have been with a lot of his friends. Many of them anticipate their bonuses and spend them before they get them, not only those items that L mentions but also renovations. I know one guy who flew in some tile guy from Tuscany just for the perfect installation on his Hamptons patio. Fortunately my bother finds this behavior abhorrent so he’ll be fine, but he regales me with these stories, some of which I heard directly from the people in question.
One can only hope that these people get attacked by “throngs of marauding hooligans”.
“i find it hard to believe that a significant portion of people who were smart enough to get the high-paying financial jobs (or related positions with similarly high percentage of compensation traditionally as bonus) are really that stupid about their personal finances to be “living on credit card debt.”
Oh lordy lordy. I can only assume you don’t have a lot of Wall Street friends. I have quite a few friends and acquaintances in their late 20s and early 30s who fit the profile perfectly. Some of them are Harvard/Yale. Some are Yale/Harvard. A few are even state school kids like I am. Some work in law, some in banking. Not a single one of them has managed to pay off his student loans, notwithstanding annual compensation into the 7 figures. Where does it go? To list just a few things:
– anything expensive that attracts that sort of woman (like table service at Manhattan see-and-be-seen bars)
– weekends in Vegas
– strippers
– surprisingly dandyish and expensive clothing for straight men
– sports betting
You wouldn’t think a million dollars a year can actually disappear on those things, but it does.
They finally settle down with some expensive girl who went to Mount Holyoke or Smith and start popping out kids. Then the list changes (now it’s BMWs and vacation houses and whatever else the wife needs to compete with her supposed friends), but the basic premise is the same. They are living poor, spending every penny on the illusion of wealth.
Not everyone is like this, but I think you would be shocked at how many people fit this profile.
i find it hard to believe that a significant portion of people who were smart enough to get the high-paying financial jobs (or related positions with similarly high percentage of compensation traditionally as bonus) are really that stupid about their personal finances to be “living on credit card debt.” i find it much more likely that they were living within their means, but perhaps not as conservatively as you or me. the “trouble” they’ll be in is just as real, but it will be in ramping down from one “means” to a reduced “means,” which involves painful adjustment from anyone who has to do it. i also don’t think the spirit of schadenfreude is justified, but go on if it makes you feel better.
this isn’t to say that there aren’t a lot of people living beyond their means, but i don’t think it’s unique to the young “affluent” people or the people who most immediately are affected by this crisis.
http://www2.highlandstoday.com/content/2008/sep/30/la-bailout-for-aig-is-not-needed/