Sunday, May 29, 2016

Sam Zell selling real estate as Greensboro's oligharchs get to go down with the ship, again

“Overall we’ve come off this extraordinary period of liquidity and this extraordinary period of low interest rates,” he said. “I think we’re unlikely to see a repeat of that going forward, and I think we’re going to see more supply in what had been pretty tight markets.”

He has been selling. Back in 2007, he once again proved his sense of market timing. As the commercial property bubble was already teetering, he sold Equity Office Properties Trust to Blackstone for $23 billion... Then prices crashed, and commercial property defaults hit the banks. As the dust was settling at the end of the Great Recession, he went on a shopping spree.

Now he’s selling again, unloading multifamily properties at peak prices on a massive scale just when a multi-year construction boom is flooding the market with new supply.

Who's supplying most of the 'multifamily' properties around Greensboro,
who sold at premium prices to whom, 
and who has increased debt exponentially over the past few years?

...So when Sam Zell speaks, our ears perk up.

On CNBC, Zell lashed out in his soft-spoken and well-balanced manner against the current zero-interest-rate environment in the US, and the fundamental damage it was doing — the man who so hugely benefited from it:

“In the most simplistic terminology, I would ask you the question, if something is free, is it valued? Is it appropriately risked?”

“I think when you talk about interest rates being close to zero for a long period of time, I’m very concerned about the fact that we have desensitized our business community to the cost of capital.”

“And we know that the cost of capital ain’t free,” he said. “Every time you defer facing up to the cost of capital, it’s going to catch up to you. That I think is the biggest concern.”

Which is why he's selling, again, 
while Roy and boys back the truck up, just like last time

“We have distorted markets. Maybe we have bubbles.” Then, on second thought, he said, “I don’t even know what a bubble is, so I wouldn’t want to be the definer of it. But I think that we have too much intervention and not enough market movement in interest rates – and in other assets.

Intervention which made the top millions and billions
paid for at the expense of everyone else.

...The problem is that they’ve so deferred reality for so long that I think they have a serious credibility problem if they don’t raise rates.”

Then he added another twist to this conundrum: “So now we’re talking about raising interest rates because of credibility and not because of economics.”

...Zell is selling, at peak prices, unloading assets at the top while he still can.


References to 2009 & the Global Financial Crisis keep popping up in reports on manufacturing, not only for the US but globally, because that’s how bad it has gotten."