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so thank you all for joining and i'd
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just like to start with fred
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have have a question about
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how the present financial situation has
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evolved if you look at the last downturn
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and there was a reference to this that
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will barry sterling talking about the
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rtc rather than the fdic
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if you look at the last downturn the rtc
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was a relatively efficient way
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for bad loans to move from banks to
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investors whether they were financial
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players or developers
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what do you see happening this time
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well um as bob told mentioned earlier we
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started seeing the weakness in the
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housing market you know after katrina 05
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so it's been
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real we're really entering the fifth
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year now of a housing downturn and um i
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think that uh the the the banks
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disgorging of distressed assets that we
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would have expected to have occurred a
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long time ago really hasn't happened
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there's not really a roadmap for them
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um you have a lot of banks that probably
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are insolvent that if they really had to
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discourage would be um you know the 500
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bank number that was tossed out was um
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probably uh maybe a soft number um in
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terms of the capital markets you know
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last year at this conference we were
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looking at the
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demise of the american financial system
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basically we were surprised but by april
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of own 9
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toll brothers became the first of the
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big public home builders to actually tap
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the debt markets we issued 400 million
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dollars of senior
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debt
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at about nine percent and then uh five
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months later we were able to go back to
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the markets and issue another 250
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million this time below seven percent
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first deal was eight and a half years
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this is ten years so so from the public
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capital markets they've opened up a lot
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um the banks are uh
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still pretty clogged up i would say
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in terms of providing new money to the
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industry um you know credit facilities
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those builders that have had to go back
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to the banks for for revising their
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credit facilities have found them
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getting chopped 30 40 percent
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prices are going up and there doesn't
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seem to be a particular
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motivation or intensity among the banks
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to really want to provide
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capital as opposed to sort of the public
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markets which i think are
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responding more quickly
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and then based on what don said are you
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revamping your whole strategy
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we are no we're we're still you know i
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mean we're we're bidding on properties
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we're we're being a little more
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conservative than some others and um you
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know i think what what don said when
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when he said our rrrs are out the door i
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think you can't i think you need
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discipline in the market i think dubai
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for example is a is an example of sort
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of that vision that may not necessarily
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have been um
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disciplined by
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some of those uh analyses and i think
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over the long term dubai you know has
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some fundamentals that will
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have a research it will have a
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resurgence but i think you still need to
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have discipline because especially in
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real estate um you know you can be very
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visionary but at some point the music
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stops and if there's not the base of
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users for your properties
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everybody loses
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right i mean one thing that struck me
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this morning when people were talking
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about the number of times the reits have
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gone to the market and raised money is
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is show me of the money the issue at all
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right now is it uh
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is there a kind of
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duality in the market where on the one
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hand it's tough to refinance on the
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other hand for for uh it is possible for
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companies uh to go into ipos look i mean
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there is money the problem is applying
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today's new money to existing situations
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i mean that's really the bottom line
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right now so sorry i missed this early
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morning panel so if i repeated
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some of the comments that came in
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earlier you know this year globally
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there's been about 78 billion of equity
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raised roughly in that number by global
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property companies
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32 billion in the united states there's
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been about 12 billion of unsecured bonds
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that have been effectively raised this
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year by public by public reits
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and that really
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only is from a standing start really in
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april to now so if you sort of think
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about that and annualize that there's
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tremendous amount of capital out there
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the problem is there's been very few
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acquisitions uh you know simon property
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i'm sure you all saw announced
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you know the acquisition of prime retail
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outlets
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company
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that was a company prime could have
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easily gone public
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it's a very capable very good business
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that was clearly an option for them uh
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although they chose to in effect sell
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the company
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um so so the problem is is actually
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there's really no issue getting capital
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it's it's very fluid i mean there's lots
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of investors that want to
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deploy more capital into companies like
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berries like david simons
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all over the world but that brings up a
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good point i'm not so sure that there's
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no issue getting capital there's no
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issue with the big guys getting capital
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and you know the question is even with
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the bank bailouts have we bailed out the
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big banks at the expense of all other
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banks and in so doing have we missed an
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opportunity uh because what i've seen
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and you know i think it's great that we
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we finally have a banker on the panel
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so you know but but let me tell you
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here's a good example like there was uh
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there were two ipos priced this week if
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you sort of just stopped but step back
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and said
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okay um
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proven ceo he's going to go out and
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start a new company
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he's sort of left his recent his old
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company has a great track record he has
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no office space
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he has no office equipment you know all
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he does is he's got a
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a group of maybe five or six other
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people that are quote willing to start a
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company well he raised 400 million this
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week to basically go out and set up a
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company
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go buy hotel properties but in fairness
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i'd say that's more the exception or the
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exception
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but i'm just saying the money is out
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there for it but i think the point
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you're raising is it's it's sort of a
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small minority of people that will
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actually get the capital and there's a
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big
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obviously a big issue out there in terms
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of yeah i would say that there's sort of
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a tale of two cities in our industry you
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know you've got the big builders
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uh i think by now many would have
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thought given the length of the severity
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of this downturn that more public home
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building companies would have busted and
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really very few have
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um
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for various reasons they were able to
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get able to get a net operating loss uh
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extension
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let me give you my card
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um but
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but the smaller builders who were more
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dependent on
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regional banks our star you know are
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crumbling and you know we're in the
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philadelphia market there's probably
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eight or nine of the
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builders the small private guys that we
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compete with because the big guys don't
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really go into the luxury market that um
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just are out of business right now and
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that's most of our competition and they
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just can't get capital and they you know
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they're really hurting i agree with with
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al i i think that the availability of
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capital is the exception not the norm
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you
