Know When To Hold 'Em

Howard Wechsler
Thursday morning, we joined 325 attendees at the Bar Association for ULI-New York’s more localized view of its Emerging Trends 2011report (see our coverage from 10/14, 10/15, and 10/18). The panelists: Colony Capital’s Richard Saltzman, Citadel Realty’s Joel Ross, JPMorgan’s Kevin Faxon, Benenson Capital Partners’Richard Kessler (ULI-NY chair), ULI’s Stephen Blank, ING Clarion’s Jeff Barclay, Vornado’s Mike Fascitelli, and PwC ’ Timothy Conlon. NY saw the biggest ratings jump over last year coming in as the second top market. Suburban markets generally lag well behind Manhattan, but expect some catch-up next year. The buy-hold-sell recommendations in the report: apartments (B:72.6%, H:21%, S:6.3%), industrial (B:37.8%, H:52.7%, S:9.5%), office (B:64.9%, H:26.8%, S:8.3%), retail (B:48.2%, H:38.3%, S:13.6%), and hotels (B:54.9%, H:33.8%, and S:11.3%).
Kevin told a captivated crowd that he’s surprised at the pace of capital flowing into its funds—in the middle of ’09, there was a queue to get out of the funds, and now there’s a queue to get in. Jeff adds that he’s also seeing investors line up for ING’s open-end funds. It’s about yield, Richard S. says—there’s good demand for both distressed and core assets, and Colony’s been focused on debt investment. We’re now witnessing more pricing guidance in the market, so lenders were smart to hold off, Jeff says, noting that we’ll see a more orderly disposition. The first few years of the financial crisis (with “pretend and extend” and government looking the other way) made sense for healing the system, but the longer you hold an asset, the longer the economy will take to heal, Richard S. warns.

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