The Ross Rant

About the Author

Joel Ross

Ross began his career in Wall St as an investment banker in 1965, handling corporate advisory matters for a variety of clients. During the seventies he was CEO of North American operations for a UK based conglomerate, and sat on the parent company board. In 1981, he began his own firm handling leveraged buyouts, investment banking and real estate financing. In 1984 Ross began providing investment banking services and arranging financing for real estate transactions with his own firm, Ross Properties, Inc. In 1993 Ross and a partner, Lexington Mortgage, created the first Wall St hotel CMBS program in conjunction with Nomura. They went on to develop a similar CMBS program for another major Wall St investment bank and for five leading hotel companies. Lexington, in partnership with Mr. Ross established a hotel mortgage bank table funded by an investment bank, and making all CMBS hotel loans on their behalf.  

In 1999 he formed Citadel Realty Advisors as a successor to Ross Properties Corp., focusing on real estate investment banking in the US, UK and Paris. He has closed over $3.0 billion of financings for office, hotel, retail, land and multifamily projects. Ross is also a founder of Market Street Investors, a brownfield land development company, and has been involved in the acquisition of notes on defaulted loans and various REO assets in conjunction with several major investors. 

Ross was an adjunct professor in the graduate program at the NYU Hotel School. He is a member of Urban Land Institute and was a member of the leadership of his ULI council. In 1999, he conceived and co-authored with PricewaterhouseCoopers, the Hotel Mortgage Performance Report, a major study of hotel mortgage default rates.

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Like an addict, the municpal governments, policians in general, various special interest groups and at least half the voting public will have to hit a hard bottom (taking the rest of us with them) before any meaningful change is implemented.

How long can a country and/or a culture survive if the only business case under discussion is one designed to level the playing field amongst its citizens via over reaching bond issues and tax increases to the benefit of those who have it bad (so to speak), in a country founded on an economic system designed to reward those who step up and out from the crowd?

While it would not be a good practice to leave a significant number of the population "too far behind" (hence the phrase from the reviled "W", "compassionate conservative" - a Bush Doctrine largely ignored or scoffed at by the mainstream media), the fact is that economic diferentiation exists on many levels - the least of which is on an individual level in all economic systems - and must be managed - but not to the destruction of the whole and not at all costs.

To some extent, my conclusion is that the media and certain politicians have formed a tacit partnership with our Citizenry's appetite for immediate gratification and avoidance of accountability resulting in a substitution of leadership for short term gains for those left too far behind and for those parasites who profit from pandering for votes and/or TV ratings.

In the absence of leadership, we'll ride these rails to a certain train wreck in due course, i.e., as long as it takes but like most addicts, hitting bottom at some time in the future without any sense of certainty as to when.
Posted by comment_user_451371 | Wednesday, March 31 2010 at 2:07PM ET
I will have to rise in a moderated defense of the much maligned municipal employee, especially since I am one.

I will concur with Joel's rant with respect to the City of Vallejo in California. It is an example of collusion between elected officials and labor unions bankrupting a community. However, that is an aberration and ultimately a political problem that the voters in that community have the power to remedy.

However, the public sector is the matrix that the "productive" sector of our society is built upon. Imagine working in a highrise where no public building or fire inspector reviewed the plans and the actual construction. I am sure we could find alternatives. But, our recent history with private rating agencies as watchdogs of the CMBS, SDO, and SIV markets comes to mind.

But, as a general proposition the total economic burden of all government at all levels needs to be reduced from a societal perspective in the interest of our national competitiveness.

It should be noted that many cities are indeed cutting staff and freezing or rolling back compensation in an effort to right size their organizations. I work for a city that has reduced its workforce by twenty percent and its operating budget by twenty-five percent in the last twelve months while maintaing its commitment to public safety and essential services. Based on dialog with my peers, this is the norm; not the situation in the City of Vallejo.

I would also note that I did not see the real estate industry complaining about their own compensation while they were overpaying for land and putting their investors in assets at historically and, in my opinion, obscenely low cap rates while helping to inflate the bubble. How much money did the industry rake off the top in fees and commissions while vaporizing the public's equity? As Pogo said; "We have found the enemy; and, he is us."

Most of the issues in Joel's rant are a function of the bubble economy we all participated in. Much of the pension excesses occurred in the last ten years and are directly attributable to the bubble economy. Ultimately, the excesses in both the public and private sectors will be rationalized as we experience the "Great Reckoning" during the next ten years of deleveraging.

Prognosis. Pain

Justin McCarthy
Posted by comment_user_451372 | Wednesday, March 31 2010 at 10:01PM ET
just read the papers or online and you will see city and state one after the other trying to deal with this problem. Look at front page of today WallSt Journal if you think I am worng. As to Wall St- they made bad erros, but it is the unions who are crushing local and state governments and that is an ongoing huge problem that has to be changed.
Posted by comment_user_451357 | Thursday, April 01 2010 at 11:13AM ET
government workers at all levels are way over compensated compared to their exact peers in the priovate sector. They earn more, get more benefits and get pensions at 20 years that are not offered any longer int he private sector. It is simply unsustainable and you just need to look at the front page of the Wall St Journalk today to see i am not off base here. Saying the real estate industry made too much money ignores the price they paid the past 2 years for their greed and stupidity. Mentioning this sounds like Nancy Pelosi saying it is OK to do bad things because the Republicans also did bad things.
Posted by comment_user_451357 | Thursday, April 01 2010 at 11:18AM ET
If the main intent is true, despite the unspecific "a fireman" and "a schoolteacher", as if they all earn the same amount and then next sentence tells us that they don't - "....... based on his last year of wages..."

Indeed, if all this is true and if these wages are way out of whack with other blue collar and middle class wages of similar jobs in the larger geo area (the town where my beach house is - indeed); then it's paycheck crunch down time and union busting time. Decrying Obama's support by the unions is ludicrous. The president did not negotiate those contracts.

Where was this writer when the bush regime lowered taxes on the wealthiest individuals and high profit dollar corporations, plunging the budget surplus right back to the deficits of his father and reagan?! Then invaded a defenseless country under a barrage of lies that Hans Blix and his group of nuclear experts were about to debunk after a major investment in their many months of surprise raids and re-examinations of palaces, old factories, etc.?

The other side of this Vallejo deficit - the people and their leader did not keep revenues up to sufficient levels, they spent too much on other things.
Don't believe this cherry-picking until a local who is in the know states facts in full enough array to come to a reasoned decision.

Posted by comment_user_451373 | Tuesday, April 06 2010 at 6:24PM ET