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.
Sam;
If what you and Lethacal are saying is true, it might account for the shrillness in the arguments for those who most adamantly support this bailout. Last night I watched a number of news programs in which folks from the financial world were interviewed about the collapse of the package. The general gist of their argument was: “Don’t the idiots who live in flyover country know what’s good for them!”. Not a good way to convince someone that they should write a check out to you, and the shrillness took me aback.
Lethacal is right on.
I have posted before about how many youngish affluent couples live right on the financial edge. They are spread thin with big mortgages, tuiton bills, SUV and sportscar payments, weekend house payments….many of these folks are living on credit card debt waiting for the holiday bonuses. It is pretty scary but that is their lifestyle and those who can’t count on a bailout from mom and pop may be in real trouble this year and next.
the shirt was probably for the berkeley carroll school. either way, i would take those odds.
I prefer a harvard guy going commando.
he was probably a harvard guy going incognito.
i disagree-
I wrote that post on my laptop in a cafe. A guy walked by the cafe with a Berkeley shirt, with a starbucks cup on his bugaboo. I’d lay odds he’s a hedgefunder fresh out of a job…
prodigal son – you need to work on your social profiling skills. berkeley + starbucks = not happening. berkeley + maclaren + gorilla + no car = lawyer. harvard/yale/princeton + bugaboo + starbucks + starter beemer = wall street.
lechacal – From your lips to God’s ears.
SnarkSlope: What is unusual about the current situation is that a very high income group of people is getting hit the hardest. I would not call them “multi-millionaires” as you did, because in my experience the net worth of many investment bankers, traders, etc. is often surpisingly small. The desire to live above one’s means affects the rich even more than the middle class. I spend a lot of time around 7 and 8 figure earners, and their spending habits shock me. Someone recently brought up Bonfire of the Vanities, which has a good illustration of how high earners feel compelled to choose the appearance of wealth over actual wealth.