00:00:12
so you know we think it is very hard as
00:00:15
Bob will tell you to find land to buy
00:00:17
good land to buy and uh the deals are
00:00:19
tiny so if you're a young entrepreneur
00:00:21
it's an interesting place to go because
00:00:23
there's 50 lots of 10,000 bucks it's
00:00:25
$500,000 so for larger funds or big
00:00:28
companies it's very hard to play in
00:00:29
those markets but the um but it's you
00:00:33
know you may have to hold on to them for
00:00:34
a while and you better know what you're
00:00:36
doing it's um so we we think that is an
00:00:39
interesting Market but there is a lot
00:00:41
more competition and we're selling
00:00:43
something we bought in California we
00:00:45
bought it in uh in in uh in February I
00:00:49
think and we paid 20,000 a lot and we
00:00:51
just were offered 10 and something
00:00:52
thousand a lot for 70 Lots that's making
00:00:55
money so that's not holding very long
00:00:58
we're we're we're kind of in shock
00:01:00
I mean I don't really understand what's
00:01:02
going on there are pockets of there I
00:01:05
know it's happening you'll tell you in
00:01:06
in some good zip codes they actually is
00:01:08
a a a significant shortage of finished
00:01:11
Lots so um if and and the home builders
00:01:14
don't want to have multigenerational
00:01:16
land again they would like to just keep
00:01:18
the infrastructure going and buy a few
00:01:20
lots and keep the machine working until
00:01:22
the Ripple effects of all the government
00:01:24
intervention in the housing market are
00:01:26
much more clear to people but you know
00:01:28
the demographics for housing are far
00:01:30
better than people think his company's
00:01:32
going to rock again it's just a question
00:01:34
of when you buy it not if you buy it
00:01:36
well last the last stat on going go buy
00:01:38
your stock this
00:01:39
morning I'll see you right outside save
00:01:42
some brokerage commissions let's not do
00:01:44
the trade on this let's not do the trade
00:01:46
on the
00:01:47
exchange yeah I committ it from a
00:01:49
totally different perspective of an
00:01:50
equity investor and my reasoning is that
00:01:53
uh you know as Barry said earlier that
00:01:56
Ben banki went around in his helicopter
00:01:58
dropping dollars down and that has
00:02:00
boosted uh you know the equity markets
00:02:03
and if the equity markets stay where
00:02:05
they are or they go up then I think the
00:02:08
opportunity indust real estate is over
00:02:10
the time was between October of last
00:02:12
year and March of this year when Barry
00:02:14
bought you know his $10,000 plot or
00:02:16
whatever uh that's one scenario and the
00:02:19
other opt scenario could be that if the
00:02:21
market drops sharply as it did uh last
00:02:24
year and then rises again the stock
00:02:26
market that is then again there'll be a
00:02:28
small window of opportunity and then
00:02:29
again people who have the cash and hand
00:02:32
and who have done their homework and are
00:02:33
ready can go in and buy and then the
00:02:36
third scenario which to me is most
00:02:38
likely is that the stock market drops by
00:02:40
about 20% and stays down for the next
00:02:42
two years and then you have $2.7
00:02:44
trillion of uh commercial real estate
00:02:47
that's going to be rolled around in the
00:02:49
next with the peak in 2011 and much of
00:02:51
that has to be uh you know refinanced
00:02:53
next year so that that will be a massive
00:02:56
major opportunity so it's entirely being
00:02:58
driven by the stock market market and as
00:03:00
long as the helicopter is around and
00:03:02
pumping money down you know it could
00:03:04
hold up but there could be other issues
00:03:06
that could come up and you know derail
00:03:08
the whole thing in which case you know
00:03:09
there'll be big opportunities so ignatia
00:03:12
staying with the the the stock market
00:03:14
for a moment um in the earlier session
00:03:16
Barry mentioned you know all the Reit
00:03:19
IPOs he did one in in August um what do
00:03:23
you think about this wave of re IPOs I'm
00:03:26
sure the number Barry you stated was 43
00:03:29
um it's probably multiples of that just
00:03:31
given the amount of work that that we're
00:03:33
seeing um there are both mortgage reats
00:03:36
there are Equity reats um what are your
00:03:39
thoughts as a an equities investor about
00:03:41
what's going on with the read IPOs I
00:03:43
made up the 43 I'm stressed to hear it's
00:03:45
multiples of that well now I was at a
00:03:48
another one of these distress
00:03:50
conferences a little bit earlier in the
00:03:52
fall and somebody said like something
00:03:54
like a just a handful of REITs today
00:03:57
that are publicly traded sort of play in
00:03:59
the health care space and one of the
00:04:01
bankers on the panel said that they were
00:04:03
aware of 37 that were in the pipeline so
00:04:07
even if he he was off by twofold it's
00:04:10
still a scary number um but what are
00:04:13
your thoughts about that yeah I agree
00:04:14
with what Barry said that the
00:04:16
reification process has pushed the risk
00:04:19
of loss from the developer and owner
00:04:21
onto the retail investors and you can
00:04:25
see that in the numbers that in 1986
00:04:27
there was the entire Enterprise value of
00:04:29
re was about $10 billion and in 2006 it
00:04:32
was $483 billion out of which 400
00:04:35
billion was Equity so you can see it's G
00:04:38
40 times or so and what it has done is
00:04:41
that the same rats because of the public
00:04:44
currency that they have have gone and
00:04:46
raised about $35 billion this year uh to
00:04:50
you know to recapitalize themselves and
00:04:52
strengthen their balance sheet and then
00:04:55
this is the largest amount that they
00:04:56
have raised since 1986 I'm sorry 1996
00:05:00
that previous peak in the cycle so that
00:05:03
has you know that's it's not some area
00:05:06
that I would like to go in if Barry with
00:05:07
his own private money is not going and
00:05:09
why would I as an equity investor want
00:05:10
to chase these reats now a lot of them
00:05:12
are selling at premiums to their
00:05:13
underlying asset values uh maybe you
00:05:16
know there is opportunity for you know
00:05:19
them to use their stock their over
00:05:21
inflated stock to go and buy other
00:05:23
things yeah but if the if the um credit
00:05:26
markets aren't there if you're a fund
00:05:30
that you formed in 20034 and you were an
00:05:33
opportunity fund so by definition fairly
00:05:36
short life to it what else is your
00:05:39
alternative you're not going to sell
00:05:40
into the down markets the only
00:05:41
opportunity right is to to monetize it
00:05:44
is to go
00:05:46
public that's the exit strategy that
00:05:48
everyone has to look at right yep I mean
00:05:51
that's the only viable exit strategy
00:05:52
today it's your version of amend and
00:05:54
extend sort of like change the form of
00:05:56
your ownership recapitalize and hope
00:05:58
someday you'll make money again
