Various people in the litigation business have begun totell me that real estate litigation and bankruptcy has fallenoff the cliff in the past few weeks. It appears that servicers havedecided that either things are better so let’s kick the can againand wait longer for things to improve. More rescue capital isavailable so deals are being cut. There is a substantial amount offund capital available to buy distressed debt so servicers areselling more loans which are then getting worked out. Servicershave realized that if they get too aggressive with foreclosurestheir fee income drops and their jobs go away. I expect the realityis a combination of all of these things. The result is litigationfor foreclosures and loan defaults has declined precipitously.
I expect this will continue to be the case for several months.However, the economy is simultaneously going into a major slowdown.Almost nobody is going to be hiring anyone for the next few months.The Business Roundtable met about 10 days ago and there was nearunanimous agreement that the situation around the world is souncertain, and there is such lack of any leadership out ofWashington, that hiring and investing would be irresponsible rightnow and probably through at least early next year. It is clear thatunemployment is about to increase. GDP may be slowing even more.The Chicago PMI is negative for the first time since 2009. Durablegoods orders fell off the cliff. Consumer spending is flat linednot counting price increases to food and gas. Europe is not solvingits critical problems, China is slowing markedly, the prospect forgrowth worldwide is negative. Hotel revpar had no growth last weekin the US. The situation in the Mideast, and especially Egypt isgoing in the very wrong direction and there will be somethingmilitary happen in Iran in the next 6 months.
While it is expected that a lot more flight capital will arrivein the US over the next few months, the combination of all of theabove is going to cause a lot of investment to cease or bedeferred. Investors will continue to want to buy good US realestate as a place to hide and make a reasonable return cash oncash, but there is now too much competition for the good assets sotransaction volume may stall.
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
*May exclude premium content
Already have an account?
Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Joel Ross
Joel 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.
