REIT conference

I went to a REIT conference today. Everybody was there. Sam Zell dropped a couple of customary F-bombs. While answering somebody’s question related to a lot of money sitting on the sidelines he said: And what the fuck are they going to buy? He was the most entertaining speaker of the day. He was very critical of Obama and of the political risks that have to be considered if investing in the US. Steven Roth, the chairman of Vornado, who is a big Democratic donor is also disappointed about the administration. None of these guys seem inclined to invest in the US assets for this reason. Another reason is that even though there are a lot of juicy assets out there, no one is willing to sell them because they have no equity. Meaning they would get no money out of the sale. Bill Ackman of Pershing Square rolled in on a big white horse after making a hugely successful bet on General Growth (GGP) when he bought it last year at 40 cents. It is trading at $14 now. He also got himself on the board of GGP, so that he can have some leverage during bankruptcy proceedings. If I was an anti-semite this conference would be a perfect example of a Jews-running-the-world conspiracy. Frankly, if this kind of Jews runs the world I wouldn’t have any problem with it. Guys like Sam Zell maybe conservative but he’s not nuts, he’s not a teabagger. He’s anything but. I guess whenever your money is involved you stop being an ideologue. You look at the facts and act according to them. You don’t make bets based on the way you WANT things to be, you make bets on the way things ARE.  I mean at this point I would consider going long insurance companies in case the Health Care Bill doesn’t pass. A major defeat for Obama, but at least I would get something out of it.

But I digress. It seems that until a large transaction will take place, a catalyst of some sort, commercial real estate market will remain frozen. Public and private investors raised hundreds of billions of dollars last year in anticipation of making acquisitions and some of them will be pressed to invest them in a short period of time. But there’s nothing to buy in terms of property, because the sellers are not in a position to sell. Where will that money go? I don’t know but I’ll stay long some REITs just in case. Steve Roth used a good metaphor about the situation: You guys came here with a knife and a fork, but there’s nothing to eat! And then he probably thought to himself: What a roomful of suckers!

Well, despite Obama’s supposed hostility towards Wall Street, the stock market had the most spectacular run in decades. Some analyst even said recently (I think I saw it on Bloomberg) that if Obama was a Republican he would be praised non-stop for his policies on CNBC. Remember how early in his presidency whenever he spoke, CNBC would have a real-time graph of Dow Jones as if to say: See? When Obama speaks market goes down. For some unknown to me reason they stopped doing it. I guess because the facts don’t conform to their agenda. CNBC is clearly an ultimate roomful of suckers.

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