Summit Notebook

Exclusive outtakes from industry leaders

Welcome to the 2008 Global Real Estate Summit

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If global real estate was at a turning point in mid-2007 after a golden era of sizzling returns and unprecedented cross-border investment, the big question at this year’s Global Real Estate Summit is how far will markets fall? 
 
Top industry executives will visit Thomson Reuters offices in London, New York, Moscow, Singapore, and Dubai on June 23-25 to discuss this and related topics.
 
Will real estate — with its dependence on debt funding — see out the credit crunch? Or will some property firms have to restructure, or even go under, unleashing a wave of forced selling? 
 
To what extent will weaker consumer spending, jobs cuts, and slower economic growth make things worse by squeezing tenant demand for retail, office, and industrial properties and hitting rents? Will markets that have so far escaped the downturn be dragged down along with the UK, where property values are 17 percent below peak levels? 
 
How much bigger can the discounts to NAV get on US, Asian, and European REITs, and when might property derivatives signal an end to the general malaise? 
 
Most importantly, will debt markets recover, enabling property investors to refinance their assets or cut deals at a time when transaction volumes have slumped? To what extent in the interim will sovereign wealth funds and other cash-rich players, as well as distressed debt buyers and mezzanine finance providers, help to plug the gap?
 
These topics, and many more, will be under the microscope as the Reuters Global Real Estate Summit gets underway. 

Video – Mortgage fraud scandal unveiled

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The FBI unveiled “Operation Malicious Mortgage” and charged more than 400 people of fraud.

The same day that two former Bear Stearns hedge funds managers were arrested and indicted for securities fraud, the FBI unveiled a big mortgage fraud investigation.

Video – Daytrading Homes

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Seabreeze Partners’ Doug Kass talks about what led to speculative buying in the housing market and who is to blame.

“We had a Federal Reserve that kept interest rates too low, for too long. It catalyzed a group of speculators that never had an intention to be domiciled in their homes,  many of whom shifted from daytrading stocks in the late 1990s, to daytrading up homes.”

Audio – Chicken or Egg?

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syron.jpgThe age-old question is something our guests have been pondering this week at the Reuters Housing Summit.

Are the pure economics the problem with the housing market right now, or is it just the sour mood the economics have put everyone in? And which created which?

Audio – Pop! Uh-oh.

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shiller1.jpgA couple of years ago, that sound was ricocheting throughout the real estate market. And quite a pop it’s been.

All week, guests at the Reuters Housing Summit have discussed the bursting of the real estate bubble, including Robert Shiller, professor of economics at Yale University and chief economist for MacroMarkets LLC

Audio – Treasury’s Steel says progress being made with bond insurers

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robert-steel2.jpgTreasury Undersecretary Robert Steel told the Reuters Housing Summit that “progress is being made” as U.S. bond insurers seek recapitalization or other strategies to maintain their top “AAA” ratings.

New York state officials have been working with banks on rescue plans for several big bond insurers, which guarantee some $2.4 trillion of debt. The companies are facing big losses from insuring bonds linked to subprime mortgages and other risky assets.

Reuters and MSN Money Panel: Off to ‘Money Heaven’

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panel1.JPGThe enormity of the housing crisis and the subprime meltdown has been clear all week at the Reuters Housing Summit.

While the moods from our guests this week have swayed from “hopeful” to “concerned” to “despairing”, the tone of Wednesday night’s panel, done in partnership with MSN Money, was definitely high-spirited.

Audio – Steel says Depression-era housing plan not the “right tool”

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robert-steel.jpgA Democratic proposal to spend billions of dollars to buy failing U.S. home loans to prevent foreclosures does “not seem to be the right tool for this task,” Treasury Undersecretary Robert Steel told the Reuters Housing Summit.

The proposal was floated recently by Christopher Dodd, a Connecticut Democrat who chairs the Senate Banking Committee. The plan is reminiscent of the Home Owners Loan Corporation founded by the government in 1934 to refinance homes during the Great Depression. Dodd said his proposal would buy troubled mortgages at current, discount prices and issue new loans to borrowers under more favorable terms.

Bob Toll’s Mad Mad Adventure

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toll.jpgBob Toll is moving on down to the Madison Square Park area of Manhattan, one of the favored new sources of real estate gossip in the Big Apple.
    
The Toll Brothers CEO met with us at the Reuters Housing Summit and said he was in contract to buy a condo at One Madison Park, an uber-luxury development promising a five-star restaurant, an entire floor of exclusive spa features and a private screening room built with the help of “a Hollywood powerhouse.” 
    
Toll already owns three homes, one of them on Manhattan’s Upper East Side, and has a fourth locked in a trust for the kids.
    
We’re moving to a different neighborhood, having been in one neighborhood for 28 years. Time to try another neighborhood, he said.
    
The 60-story tower has kept the gossip columns and housing blogs atwitter for months over its amenities and celebrity buyers like Naomi Watts and Liev Schreiber. Not to mention an average price of $2,300 per square foot. 
    
But the interest also comes from the name, One Madison Park, since the actual address One Madison Ave is already known to Manhattanites as the golden-capped clock-tower building that graces the city’s skyline.
    
To add to the excitement, Israeli developer Yitzhak Tshuva and his Elad Properties (of Plaza Hotel fame) is apparently planning a residential project around the clock-tower building, the one called One Madison Ave. Daniel Libeskind will design.   

 We were a little confused too, so we asked him to clarify.
    
We’re going down to Madison Park, down to that area, he said. No, not the clock tower. One Mad.

Audio – Picking the American President

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jackson.jpgWith Presidential primary season inching closer to a conclusion and the “Super Bowl” of U.S. politics about ready to kick off, Rev. Jesse Jackson gave his thoughts as to where things stand for Democratic candidates Sen. Barack Obama and Sen. Hillary Clinton.

Speaking at the Reuters Housing Summit in New York, Democrat Jackson said that both candidates had qualities that he believed would serve them well in the general election. Jackson, an unsuccessful candidate for president in 1988, said he thought Obama, despite having a shorter political career than Clinton, was qualified for the Oval Office.

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