More CRE Market Information

Some oberservations and conclusions from a recent presentation by Green Street Advisors at the UCLA Anderson Economic Forecast Conference:

1. We don't know where the prices are for sure.....nothing is trading.....we think they're down 35%-40%
2. Cap rates are probably back to about 9%
3. REIT prices are off 65% from their '07 peak - a decline of this magnitude equates to a 40% decline in unleveraged property values
4. Broad capital markets are recovering, but real estate capital markets are a mess.
5. Price corrections often overshoot value corrections
6. The making of a mess: the pace of commercial mortgage orginiations exploded between '05-'07 at the same time that underwriting standards became extraordinarily loose
7. A large portion of '05-'07 loans - about $185 billion of the $600 billion total - are scheduled to mature between 2010-2012
8. Over $1,000,000,000,000 (yes that's trillion) of CMBS maturities occur by 2012
9. Opportunities will abound - One man's distrees is another man's opportunity
10. Real estate is an inflation hedge - That may matter a lot someday