challenges and strategies in real estate for 2010

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Challenges and Strategies in Real Estate for 2010. Remarks by: David M. Mincberg Chairman and Chief Executive Officer Flagship Properties Corporation Chairman, Houston Housing Authority Houston, Texas. Background The Real Estate World Has Changed Why and How. Real-World. - PowerPoint PPT Presentation

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  • Challenges and Strategies in Real Estate for 2010Remarks by:

    David M. MincbergChairman and Chief Executive OfficerFlagship Properties CorporationChairman, Houston Housing AuthorityHouston, Texas

  • Real-WorldBackgroundThe Real Estate World Has ChangedWhy and How

  • Houston by the NumbersCity of 2 million peopleMetro area of almost 6 million peopleArea of almost 1,500 square milesRemarkably diverse90 different languagesLagging woefully in mass transit

  • Opportunity!Create a visionCraft a planNot encumbered by pastDesign for reality

  • Survey TimeReal estate pricing/values?Inflation or Deflation?Dj vu?Analogies anyone?Bubbles upbubbles downHow long do bubbles last?

  • Is it True?Did real estate developers really over-leverage?

  • Whats Really Out There?Or said differentlyWhats lurking in the woods?

  • Vacancy Levels Continuing to Rise Sharply

  • Monthly CMBS Delinquency

  • $1.5 Trillion of Commercial Mortgages are Maturing Between 2009 and 2013

  • One banker said to the other

  • CRE Value TrendsOpportunistic funds are down 52% according to the NCREIF/Townsend fund indices.Core funds are down 36.3% from their peak by the end of Q3 2009.

  • Commercial Real Estate Value TrendsBlackstone marked down its real estate portfolio by 30% in Q4 2008 and another 19% in Q1 2009.Wall Street Journal 05/07/2009Goldman Sachs biggest private real estate equity fund, called Whitehall Street Global Real Estate, L.P., invested $3.7B between May 2007 and August 2008 in a portfolio of casinos, hotels and office buildings. They have since written down those assets by $2.1B--Wall Street Journal 05/15/2009

  • CRE Value TrendsMIT Transaction-Based Index shows property values have fallen 39.2% from their peak by the end of June, 2009.Moodys/REAL CPPI shows property values down 40.6% as of the end of August.NACREIF Property Index indicates that it has recognized less than two-thirds of the coming right-downs in property values.