Friday, December 31, 2010

Happy New Year! Wishing you health, happiness and the very best in 2011!

Thursday, December 30, 2010

Takeover War Gets Bigger—Blackstone Is In .

By KRIS HUDSON

  • DECEMBER 29, 2010


  • Original post: http://online.wsj.com/article/SB10001424052970203513204576048240134649426.html?mod=WSJ_RealEstate_MIDDLETopNews

    Blackstone Group LP has jumped into the bidding war for Australian shopping-center owner Centro Properties Group, intensifying what is likely to be one of the largest property takeover battles of 2011.

    Blackstone, among the world's largest buyout firms with $100 billion under management, made a preliminary offer known as an "indicative bid" by the Dec. 17 deadline set by Centro, according to people familiar with the matter.

    The size of Blackstone's bid couldn't be determined Tuesday. The buyout giant primarily is interested in Centro's 600 U.S. properties, the people said.

    The properties, located throughout the country, consist of strip malls and other nondescript neighborhood shopping centers anchored by grocers or discount retailers, like TJX Cos.' TJ Maxx and Marshalls and Kroger Co. Centro valued its U.S. portfolio at $9.5 billion at the end of its fiscal year on June 30.

    Centro also owns 112 malls in Australia and New Zealand.

    Centro Properties Group

    Brooksville Square Shopping Center, in Brooksville, Fla., is among Centro's U.S. properties up for sale.

    Values for U.S. strip centers have rebounded from the lows of the recession but have yet to fully recover. Green Street Advisors estimated the average U.S. strip center suffered a 40% decline in value from the middle of 2007 to the middle of 2009. Since then, it has recovered roughly half of the lost value, according to Green Street.

    Melbourne's Centro was one of the first big real-estate companies to get into trouble in the downturn, failing to refinance $3.4 billion in debt that matured in early 2008. Since then, it has been kept on life support by its creditors.

    Lately, 25-year-old Centro has become the symbol of another trend: the return of deal making in commercial real estate. Although rents and vacancy trends remain weak in many markets, investors have been bidding up values of many properties in anticipation of a recovery. Real-estate returns are also looking more attractive in a low-interest-rate environment.

    Centro is one of the biggest assets on the block, making it especially attractive to companies like Blackstone that have a lot of money to put to work.

    A joint bid for the entirety of Centro also has come from a consortium led by U.S. real-estate investor NRDC Equity Partners LLC and Australian investor Lend Lease Corp., people familiar with those talks said. That bid is in excess of $16 billion, these people said.

    Rival Bid Emerges

    In addition, entities affiliated with shopping-center mogul Chaim Katzman's Gazit-Globe Ltd. have made separate bids for Centro's U.S. and Australian properties, people familiar with the talks said. Gazit teamed with Colonial First State Global Asset Management to offer $7.3 billion for Centro's Australian and New Zealand properties, the people said.

    And Gazit's U.S. affiliate, Equity One Inc., paired with Apollo Global Management LLC to make a joint bid for Centro's U.S. operations, though the amount of that bid couldn't be determined.

    Centro is being advised by UBS AG, Moelis & Co. and J.P. Morgan Chase & Co. Several smaller suitors, such as Australia's Charter Hall Retail REIT, have made offers for pieces of Centro's Australian and U.S. empires rather than the whole, the people said.

    Centro's fate is complicated by its intricate capital structure, which includes dozens of lenders, cross collateralization and properties owned by syndicates of thousands of Australian mom-and-pop investors.

    Bankruptcy a Possibility

    There remains a chance that Centro could end up in Australian bankruptcy if it can't find a buyout or recapitalization deal that pleases its lenders. Australian bankruptcy, called administration, mandates liquidation rather than reorganization.

    Blackstone has emerged as a major player in many of the biggest deals this year. In the hotel business, the firm participated in a $3.9 billion buyout of bankrupt hotel chain Extended Stay America Inc.

    In retail, Blackstone was part of the group that took General Growth Properties Inc. out of bankruptcy protection and also partnered with mall Glimcher Realty Trust this year to buy malls.

    The pursuit of Centro's U.S. properties is a logical one for Blackstone. The buyout firm was among those that took an initial look at Centro in early 2008, when Centro first opened its books to would-be acquirers.

    Centro's occupancy slipped to 88.3% in the year ended June 30 from 88.7% in the previous year. Its U.S. net operating income declined by 4.2% in the year ended June 30.

    Mr. Scott's Buying Spree

    Since late 2007, Centro has struggled to refinance and pare its $18.4 billion debt load. The debt was amassed during the boom years as former Chief Executive Andrew Scott went on a buying spree that made company one of the world's largest retail landlords. Centro's U.S. portfolio carries debt of $8.1 billion.

    Mr. Scott, who was ousted in early 2008, amassed the company's U.S. portfolio by purchasing real-estate investment trusts New Plan Excel Realty Trust, Kramont Real Estate Trust and Heritage Property Investment Trust Inc.

    Write to Kris Hudson at kris.hudson@wsj.com

    For Sale or Rent: The Governor's Mansion



    Forty-three states have an official governor's mansion, and most state chief executives still call them home. But living rent-free is falling out of favor with some governors -- and with voters

    Monday, December 13, 2010

    Zeitgeist 2010: Year in Review

    US Shoppers Can't Say No to Deals: Survey

    Getty Images

    The number of U.S. shoppers unable to resist buying "impulse" gifts for themselves or others is on the rise this season, due to the plethora of discounts and deals in stores.

    Some 46 percent of U.S. consumers have already purchased an "impulse item" this season, according to an exclusive survey for Reuters by consumer research firm America's Research Group.

    That number increased from 28 percent and 38 percent in two similar surveys conducted earlier in November.

    The impulse buying is due to the attractive price tags offered by retailers, who are having to discount merchandise to lure shoppers.

    About 55 percent of consumers said they found the deals better this year than last year, with only 26 percent saying they appeared to be comparable.

    "What this says is, a lot of people have seen something they've bought they weren't planning on," said Britt Beemer, president of America's Research Group. "You have 55 percent of people saying the deals are better this year, which is why the 46 percent made an impulse purchase."

    Retailers from Macy's to Wal-Mart Stores started promoting merchandise earlier this year, even in advance of Black Friday, the historical kick-off to the holiday shopping season, which attracts droves of shoppers for "door buster" deals.

    Amid high unemployment and a slow recovery for the U.S. economy, shoppers are still tentative about opening their wallets, but recent sales data from the Thanksgiving weekend point to pent-up demand that has boosted revenue.

    Last week, retailers posted their best sales gains in four years in November, although analysts cited the danger of narrowing profit margins from the surge of discounts.

    The National Retail Federation still expects that retail sales will rise by a mere 2.3 percent this November and December, compared with a 1.1 percent rise in 2009 and a 3.4 percent decline in 2008.

    The survey found that 72 percent of consumers planned to shop in the first two weeks of December, up from about 62 percent last year.

    And more people may find a present under the tree for themselves this year, according to the survey.

    Respondents said they were twice as likely to buy gifts for more people this year, than less people.

    That could add up to a lot more cash for retailers, given that the average spent for a gift is $45, said Beemer.

    This year's hot gift is a smart phone and some 16 percent of respondents said they either had already purchased one, or planned to buy one soon.

    The telephone survey of 1,000 U.S. households was conducted on Dec 4 and Dec 5.

    Tuesday, December 7, 2010

    Sharing the Dakota With John Lennon

    Original Post: http://www.nytimes.com/2010/12/07/nyregion/07appraisal.html
    By CHRISTINE HAUGHNEY New York Times Published: December 6, 2010

    Keith Bedford/Reuters
    The Dakota, on Central Park West and 72nd Street, where John Lennon lived from 1973 and where he was killed 30 years ago.

    Long before its history was marked by the sound of bullets, thousands of fragrant flowers and crowds grievously singing “Imagine,” the Dakota was just another historic Manhattan co-op where among its famous inhabitants lived a musician named John Lennon.



    MacMillan
    John Lennon, Yoko Ono and their son Sean in 1975.

    Before he was gunned down in front of the building 30 years ago Wednesday, he was the seventh-floor resident who brought sushi to the building’s October potluck. He was known as a protective father and an enterprising real estate collector, irking a few neighbors by buying up five apartments in the building.

    One of the many quirks and privileges of living in Manhattan is finding neighbors who are famous poets, celebrated scientists and aging jazz musicians. It was no different for residents at the Dakota, who grew used to seeing the former Beatle pass through the building’s entrance in his fur coat. What made the Dakota different from other buildings, besides its distinctive gothic design, was that so many residents were also celebrities that it afforded Mr. Lennon a certain degree of privacy.

    “This building is chockablock full of famous people,” said Roberta Flack, who lives in the Dakota next door to Yoko Ono. “Most artists like myself tend to keep to themselves.”

    Mr. Lennon’s and Ms. Ono’s life in the Dakota began in 1973, when they were looking to move from their loft on Bank Street. Bob Gruen, who photographed Mr. Lennon when he lived in New York City, said the couple wanted a home with better security.


    Mario Cabrera/Associated Press
    In 1980, after Lennon was killed, the police erected barricades as crowds formed outside the building.


    He said they looked at homes in Greenwich, Conn., and on Long Island before buying the apartment at the Dakota from the actor Robert Ryan, making it past the building’s notoriously picky board.

    While their early days in the Dakota were rocky and Mr. Lennon briefly left his wife for May Pang, Mr. Gruen said that Mr. Lennon returned by late 1974 and the couple settled into the throes of nesting. Ms. Flack recalled hearing them rehearsing music. Their son, Sean, arrived in 1975.

    Like many new homeowners, Mr. Lennon and Ms. Ono renovated their kitchen. Mr. Lennon wanted it to resemble the open spaces many artists had in their lofts downtown. Their home “wasn’t particularly stylish,” recalled Stephen Birmingham, author of “Life at the Dakota: New York’s Most Unusual Address,” which was first published in 1979. But Ms. Flack, who agreed to be interviewed with Ms. Ono’s consent, said the apartment was always uncluttered and tasteful.

    The Lennons socialized with neighbors who also had children. Sean was friends with the children of Warner LeRoy, who owned Tavern on the Green. Paul Goldberger, the architecture critic at The New Yorker, who lived in the Dakota, was invited to a Christmas dinner at the LeRoys’ apartment in the late 1970s and recalled the Lennons being there. He said that the dinner was “warm and very low key,” and that Mr. Lennon chatted with Mr. Goldberger’s future mother-in-law about the music industry.

    Most neighbors remember him being preoccupied with raising his son. Mr. Birmingham said that when he visited, Mr. Lennon had wrapped packing twine around the staircase to protect Sean. Ms. Flack recalls Mr. Lennon taking Sean out for walks in the park with his bicycle.

    “Sean loved his dad,” said Ms. Flack, pouring every inflection into the word “loved.” “There was a lot of holding hands and looking up, and a lot of holding hands and looking down.”

    The Lennons generated the most criticism from neighbors over their real estate purchases. Mr. Gruen said that in addition to two seventh-floor apartments, they bought three other apartments, to use for storage, a work studio for Ms. Ono and an apartment for guests.

    Ms. Ono, accustomed to being a scapegoat for the breakup of the Beatles, absorbed more than her share of disdain inside the building, too.

    “There was a little bit of resentment built up against Yoko, more because she kept trying to buy more apartments,” said Mr. Goldberger, who briefly served on the Dakota’s board. “I think people didn’t dare get mad at John Lennon, so she bore the brunt of any resentment.”


    But Ms. Flack defended their apartment shopping and said she wished she had bought more apartments back then, when they were less expensive. A storage unit once owned by the Lennons sold in 2008 for $801,000.

    “When you’re John Lennon and Yoko and you have all of the money in the world,” Ms. Flack said, “how come he can’t buy all that he wants?”

    The Lennons’ real estate purchases did not color the opinions of one Dakota resident. Leonard Bernstein’s daughter Nina Bernstein Simmons, whose family moved into the Dakota in 1975 when she was 13, said her “great brush with John Lennon” took place at the building potluck when the Lennons brought a platter of sushi. When Ms. Bernstein Simmons stood next to Mr. Lennon at the dessert table, he stared at the sweets and said, “I want something mushy and disgusting,” she said, still remembering his Liverpool accent.

    “I think I muttered something about the pecan pie looking good,” she added.

    Leonard Bernstein enjoyed Mr. Lennon’s poetry so much that at the annual potluck, he made his wife, two daughters and son approach Mr. Lennon and then sing an improvised round he had taught them of Mr. Lennon’s poem “The Moldy Moldy Man.”

    It was one celebrated musician testing his work out on another musician.

    Ms. Bernstein Simmons said, “I think John was amused by it.”

    A version of this article appeared in print on December 7, 2010, on page A29 of the New York edition.

    Wednesday, December 1, 2010

    Groupon Cofounders About To Become Billionaires?

    Original Post: http://blogs.forbes.com/luisakroll/2010/11/30/groupon-cofounders-about-to-become-billionaires/?boxes=Homepagelighttop

    by Luisa Kroll Bounty HunterNov. 30 2010 - 1:57 pm



    In September, we named Eric Lefkofsky, the biggest individual investor in Groupon, as a ”billionaire in the making.” He was one of 15 people we cited as likely to become billionaires by 2015. Fifth on the list, behind folks like Zynga’s Mark Pincus and Facebook’s first president Sean Parker, he was estimated to be worth $750 million.

    Now he could be the first one to officially cross into the billionaire ranks. The New York Times DealBook reported today that Google (nasdaq: GOOG) might strike a deal by end of week to buy Groupon for $5 billion to $6 billion. Based on the lower estimate, Lefkofsky’s 30% stake would be worth $1.5 billion. That valuation might also land his cofounder and the group’s chief executive, Andrew Mason, among the world’s wealthiest. His estimated stake of 20% would be worth $1 billion. (That does not factor in taxes if it turns out to be a cash deal).

    It’s been a crazy couple of years for Groupon, which presents online customers with deep discounts on products or services. (The name blends “group” and “coupon.” ) Groupon raised $135 million in April, the biggest chunk of it from Digital Sky Technologies, the Moscow investment fund behind Facebook and Zynga. Based on that transaction, the 17-month-old company was already valued at $1.35 billion. The only company to reach a $1 billion valuation faster, according to Forbes writer Christopher Steiner, was YouTube (now part of Google), founded in 2005. We featured Groupon on our August cover, calling it the fastest-growing company ever.

    Lefkofsky and Mason met at InnerWorkings, a Chicago firm where Mason worked after college. Lefkofsky was a founder of the outfit, which farms out companies’ printing jobs. Lefkofsky later gave Mason $1 million in angel capital for another startup idea he had. While Mason runs Groupon, Lefkofsky is busy looking for other investments. Earlier this year, he cofounded a venture fund LightBank, which has stakes in nearly a dozen companies. He is also the author of Accelerated Disruption and an adjunct professor at the University of Chicago Booth School of Business.

    As for whether the deal will get done, Google said it does not comment on “rumor or speculation.” Calls and/or emails to Groupon and Lefkofsky have not yet been returned.

    Friday, November 26, 2010

    Bank Art Sold In Ireland

    Original Post: http://www.luxist.com/2010/11/25/bank-art-sold-in-ireland/

    by Deidre Woollard (RSS feed) Nov 25th 2010 at 6:02PM


    The Bank of Ireland has raised around $2 million by selling off some of its Irish artworks. The Washington Post reported that Adam's auction house sold off 144 works this week. Bank of Ireland decided to sell the art after a recent bailout but the money isn't going back to the bank, instead the money will be donated to local charities. The auction was the subject of some controversy with protestors outside protesting the banks. The auction house moved the auction to Dublin's Shelbourne Hotel after noting the large amount of interest in the auction. The auction house is examining the bank's remaining works for potential future sales and Ireland's five other Irish banks are considering the sale of their own art collections. The sale follows other bank-owned art sales around the world.

    Monday, November 22, 2010

    How Facebook fixed the social advertising problem

    Original Post: http://tech.fortune.cnn.com/2010/11/22/how-facebook-fixed-the-social-advertising-problem/

    By Kevin Kelleher, contributor November 22, 2010 3:39 PM


    MySpace was once the big kid on the social networking block, but Facebook beat it in part by improving on its social advertising strategy, or lack thereof.




    So much of the discussion around Facebook centers on the way it's shaping our social interactions with others that it's easy to overlook how profoundly the company is rewriting the rules of online advertising. When Facebook's revenue is mentioned, it's usually in the aggregate: The six-year-old company will bring in as much as $2 billion this year and close to twice that next year.

    The bulk of that figure will come from selling ads on its social-network platform – a web technology that was seen as barren soil for ad revenue until a year or so ago. Facebook made social ads pay through a number of tricks. One of the most important innovations was to reach out to the smallest advertisers with self-serve ads on its social-networking site.

    Setting up a Facebook ad is simpler than using Google AdWords. To test the idiot-proof concept, I set up a page for my work as a freelance writer. It wasn't terribly elegant but it did take less than two minutes. In another five minutes, I had created an ad targeted at my own demographic – male, 40s, college grad, living in the San Francisco Bay Area and interested in business or technology journalism.

    Facebook instantly narrowed it down to 4,220 members who might see the ad and recommended I bid between 30 and 45 cents per impression, or between 72 cents and $1.05 per click. Granted, it must have been one of the most thoughtless and ineffective ads in Facebook's history, with no hope for a return on the 30 cents I bid. But it illustrated an important point: In less than ten minutes, any business can not only hang up a virtual shingle on Facebook, it can also became an advertiser.

    Basic tutorials on the site help advertisers design more effective ads. Once they are live, they can receive customizable, granular data on its performance in a simple format that encourages them to experiment with different kinds of ads. Tweaking the location or demographics of users or trying out different text, images and keywords is aided by data comparing the response to alternate ads.

    Facebook benefits from the experimentation too. The company doesn't charge for the data, but the experiments of its legion of advertisers offers the company an unprecedented insight into what makes people click on ads on its site.

    Understanding the behavior of its members on the site is central Facebook's goal of building a robust ad business. Advertisers and consumers interact differently on Facebook than they do in other media: Here, they become friends. MySpace had some limited success in getting its members to be online buddies with bands like My Chemical Romance and TV shows like The Office. But persuading people to connect with a corporation on a social site was a whole new game.

    It works better for some companies than others. Only 3,600 of Facebook's 500 million members "like" Goldman Sachs (GS). But 17.5 million like Starbucks, making it more popular than South Park and the Twilight Saga. And 18 million like Coca-Cola, putting it behind Lady Gaga but ahead of Megan Fox on the list of Facebook's most popular pages. On Starbucks' wall, people write declarations of love to brewed beverages that many lonelyhearts can only dream of.

    Starbucks (SBUX) lets its customers reload their Starbucks cards on Facebook, and when they do a notice appears on their wall and in their friends' news feeds. Facebook has found that people are much more likely to click on a company's page if it appears to be endorsed by their friends.

    Such engagement has driven up Facebook's click through rates. Back in 2007, Facebook was called the "worst-performing site" for ads, with click-through rates of 0.04 percent, or 4 clicks per 10,000 page views. But that started to change last year. Companies that could entice users to their wall pages started to see click-through rates of 6.5 percent. According to Facebook, Japanese airline ANA targeted its ads to travelers who liked Japanese culture and saw click-through rates of 25 percent.

    Facebook knew there was no magic formula for an advertiser to connect with its users. It encouraged companies to experiment. Clorox marketed its new line of Green Works cleaners by asking Facebook members to nominate and vote on "green heroes" in their community who would receive grants. The campaign drew 400 entries and 20,000 votes. A campaign by Levi's offering a 40 percent discount on a new line of clothes brought a 35-percent increase in Facebook members who liked Levi's page, many of whom are still connected.

    Some critics might argue, with good reason, that Facebook's efforts to study its members behavior, to entice them into online relationships with brands and to share that information in their friends' feeds benefit advertisers at the expense of personal privacy. In fact, the closer you look at how Facebook is turning its site into a vibrant ad market, the easier it is to understand why the company has pushed so hard against reforming its controversial privacy policies.

    On the other hand, a lot of people – starting with the 18 million who like Coca-Cola (KO) – have no such qualms. And the revenue that Facebook is expected to bring in this year also suggests the company's approach is working well enough. The world Facebook is creating – a place where individuals sacrifice their privacy in exchange for a friendship with a brand – may not be a utopia, but it is going to be highly profitable.

    Friday, November 19, 2010

    Your Pushy Wife May Be Your Ticket To Billions

    Matt Schifrin Nov. 18 2010 - 9:15 pm

    Original Post: http://blogs.forbes.com/schifrin/2010/11/18/your-pushy-wife-may-be-your-ticket-to-billions/?boxes=Homepagelighttop


    Last week Bloomberg Businessweek ran a cover story on China’s dominant search portal and stock juggernaut Baidu (BIDU). The story reported on Baidu’s smart, cut-throat and compromising approach to becoming China’s Google. In the story there are accusations that Baidu rigs its search results to favor advertisers and kowtows to Communist party wishes. Those who believe in “socially conscious” investing should check their fund holdings for BIDU. (Here is a list of 22 ETFs holding a BIDU).


    However what was really interesting to me about the Baidu cover story was a sentence in the 22nd paragraph of the story. It points out how billionaire CEO Robin Li, decided to become an Internet entrepreneur because his wife Melissa urged him to do so. According to the story “Melissa pulled him(Robin) away from the screening and declared that she would like her husband to be an Internet company founder.“ The incident took place at Stanford University in 1999 while the couple was watching a documentary film featuring an interview with Yahoo (YHOO) founder Jerry Yang. The story goes on to say: “inspired by Yang and pushed by Melissa,” Li decided to build an Internet search engine for China.

    Today Robin Li is worth $7.2 billion and he is China’s second richest person. Baidu’s stock of course has been a super hero for its shareholders. Stock is up 163% year to date and 1,425% in the last five years.

    This got me thinking that an untold number today’s successful men probably owe a great deal of thanks to their wives for being the catalyst or the driver of their great wealth and fame. Strong women behind great men are nothing new. As far back as the Bible’s Rebecca and Esther do we find influential ladies out of the limelight but having a big affect on their spouses choices.

    Of course one of the reasons that I noticed this particular factoid in the Baidu- Robin Li Businessweek story has to do with one of the Warren Buffetts Next Door I profile in my new book, Mike Koza. He readily admits that if not for his wife Maria, a Filipina immigrant he met in the personal ads of the Sacramento Bee, he would not have taken control of his portfolio and began investing on his own.
    Civil engineer Koza was content spending his weekends whitewater rafting in California’s Central Valley and figured that his under-performing Morgan Stanley broker was about the best he could expect. She was the one who shook him out of his comfort zone and got him to to fire his stockbroker and take control of his nest-egg. That was about a decade ago.

    Since then Mike has had an average annual return on his portfolio in excess of 30% per year according to Marketocracy.com and he has turned a $100,000 portfolio into a $3 million nest-egg. I have seen the proof and reviewed his trades.

    Mike is a value investor who spends hours each day online reading about the companies he invests in and listening to downloads of management conference calls. He looks for companies being mispriced by Wall Street and figures out his own intrinsic value for stocks using discounted cash flow analysis. (Click her to watch a video of Mike Koza explaining his investing approach.)

    During the depths of the financial crisis in 2008, Mike made big bets on financial stocks like Radian Group (RAD) and Trina Solar (TSL) and profited handsomely. Right now has significant investments in several Chinese stocks including China Media Express Holdings (CCME) ,a Hong Kong based company has a television advertising network displayed on buses and other urban areas.

    In researching my book I interviewed both Mike and his wife Maria because I knew she was the driving force behind his investing success. Maria has had a hard life. In the Phillipines she grew up in poverty and before meeting Mike she worked for more than a decade as a nurse in the Middle East, and then as a low paid nanny in the U.S.

    Maria is petite and speaks with a soft, heavily-accented voice. Here is what Maria Koza had to say about her role in the family’s success:

    “It’s a team effort. I guess I am the visionary and he is the doer.”

    Comment below if you know of any other great men, whose pushy wives were the catalyst to their success.

    Wednesday, November 17, 2010

    Behold America’s Most Expensive Home: It’s A Shack.

    Original Post: http://blogs.forbes.com/stephanefitch/2010/11/16/behold-americas-most-expensive-home-its-a-shack/?boxes=Homepagelighttop

    by Stephane Fitch Real Estate Advisor Nov. 16 2010 - 6:23 pm


    What’s the most expensive home in the U.S.? Back in May, Forbes reported that it was the Los Angeles home being sold for $150 million by the late television producer Aaron Spelling.

    Not even close.


    The Spelling mansion has 56,500 square feet of space covering 123 rooms, 16 carports and a bowling alley. At about $2,700 a square foot, the house is not so terribly expensive. Throw in the fact that it rests on 4.6 acres in Los Angeles’ Holmby Hills neighborhood, and there’s an argument for this being a pretty decent bargain.


    To find really expensive real estate, think small. We asked our real estate analyst friends at Seattle-based Zillow.com to sift through the priciest realty listings in search of the most expensive one with less than 1,000 square feet of living space. They turned up all kinds of shacks, hovels and cabins trading for more than $1 million, including a half-dozen or so that are more expensive on a per-square foot basis than Spelling’s Manor.

    It probably won’t surprise you to discover that pound-for-pound, the most expensive real estate listing in the U.S. is closer to the beach than the Spelling home. Wealthy homebuyers are obsessed with ocean views. Even if local public-access rules allow beachgoers to stroll by and stare while the beachfront homeowners pour milk on their shredded wheat, they’ll pay a huge premium for beachfront.

    An hour’s drive east of Spelling’s old home lies the tony beach community of Carpinteria. There, you’ll find a humble beach shack that has been sitting at 3485 Padaro Ln. since it was first constructed a century ago. The grandchildren of the man who originally constructed this abode are selling. And at $5.3 million, it may be the most expensive real estate listing in the U.S.

    Officially, this home has just 651 square feet of space–less space than a regulation squash court. The agent who’s handling the sale, John Henderson, explains that the house’s true square footage is 750 square feet. But even so, the asking price on this property works out to $7,060 per square foot, nearly three times what Spelling’s widow wants for their home.

    But how you calculate the value of this Carpinteria home depends on how you look at it. “It’s got probably the smallest master bedroom I’ve ever seen,” Henderson admits. “But it’s on nearly half an acre of land and it’s got 92 square feet of beachfront.” That’s twice the frontage that neighboring properties have, he says. And local officials have okayed a plan to tear down the existing property and replace it with a 2,600 square foot house.

    So maybe it’s not so expensive. If you plunk down $5.3 million for this house and spend $300 a square foot building a high-end home that fits with the approved plans, the $6.1 million total investment will bring your per-square-foot price down to $2,300.

    But it looks like this still may end up being the most expensive home in America anyway. Henderson reports that about half the homebuyers he’s shown the property to say they’d like to keep the existing building in place. The antique shack is small, but polished. It’s charming enough to command a $600-a-night rate from the occasional vacation-home renter during California’s peak season.

    If there’s a lesson in all this, it’s that we often forget how large a contribution land makes towards the value of real estate. There’s a 630 square foot house for sale at 15415 Eastvale Rd. in Poway, Calif. The sellers want $2.3 million. There’s no beach in Poway, so the asking price seems nuts. Alas, the home is sitting on 8.25 acres of land. The land might be subdivided into additional lots someday. The house is an afterthought.

    So if we discount for land value, what is the most expensive home in the U.S., then? Hard to say. The house in Carpinteria still looks pricey. But a more expensive home might be a 702-square-foot condo at 1528 Miramar Bch. in Santa Barbara, Calif. The sellers want $2.2 million and the unit is sitting on just 1,742 square feet of land.

    Here’s one more question about these high-value micro-homes: Why isn’t anybody building houses like these anymore? The habit of homebuilders is to construct the largest homes they possibly can on the land they get. They’re responding to consumer tastes, of course. But consumers seem to be downsizing these days. Maybe it’s time to bring back the 800-square-foot house. Some of the ones Zillow sent along are awfully cute. (Hey, it worked for BMW Group’s Mini, right?)

    Whatever. The point is that there are very small homes for sale at prices far in excess of the $2,700-a-square-foot price at which the Spelling mansion is being offered. I’m not saying we got our story about the Spelling mansion wrong. But I look at these listings and it makes me think.

    What follows is a list that Zillow sent. All are for sale for more than $1 million. All appear to have less than 800 square feet of living space. (I say “appear to have” because the information we have is from public records. When one investigates these high-end micro-homes, it often turns out that they’re a little bigger than what the public records state.)

    319 Pacific Ave., Solana Beach, Calif., asking $2.4 million.
    59-279 Ke Nui Rd., Haleiwa, Hawaii, asking $2.3 million
    1528 Miramar Bch., Unit C, Santa Barbara, Calif., asking $2.2 million
    585 Herring Creek Rd., Vineyard Haven, Mass., asking $2.2 million
    909 S Pacific St., Oceanside, Calif., asking $1.9 million.
    158 Sunset Ln., Mantoloking, N.J., asking $1.9 million

    It's Free to Look: 15 Central Park West's Coveted "D" Line | The New York Observer

    It's Free to Look: 15 Central Park West's Coveted "D" Line The New York Observer

    Tuesday, November 16, 2010

    What You Need To Do With Your Investments Before 2011

    Uriginal Post: http://blogs.forbes.com/investor/2010/11/16/what-you-need-to-do-with-your-investments-before-2011/?boxes=Homepagelighttop

    Nov. 16 2010 - 9:34 am Posted by Chris Barth



    Investors looking to make the most of their money should pay attention to the calendar; the end of the year is approaching, and it brings with it potential tax repercussions. With favorable tax rates on capital gains in danger of expiring in 2011, investors have a month and a half to crunch the numbers and make a hold ‘em or fold ‘em decision.


    Barbara Weltman, an expert from tax resource JK Lasser, has some advice for how to make the most of your 2010 investments, whether gains or losses.

    Tax Rates

    Central to the decision-making process are potential spikes in tax rates after year’s end. Currently, capital gains from the sale of long-term securities—as well as most ordinary dividends on stocks and equity mutual funds—have a 15% maximum tax rate for higher income individuals and no taxes at all for the bottom two tax brackets. If President Bush’s 2001 and 2003 tax cuts are not extended, the lowest tax brackets would no longer be exempt, and the cap on the upper tax brackets would increase. While the recent Republican surge makes it less likely that tax rates will change in 2011, particularly for the wealthy, the likelihood of a compromise being pushed through Congress before the end of this year has increased.

    “Capital gains rates won’t be any lower next year,” Weltman points out.

    Whatever happens during this session of Congress, you can be sure that the tax rates won’t decrease. An extension of present rates could keep taxes down through 2012, but it is highly unlikely they will drop below current rates in the foreseeable future. If Congress fails to take action—an admittedly unlikely situation—the tax rate for upper tax brackets could more than double, reaching as high as 39.6% taxes on qualified dividends.

    So what should you, the investor, do before New Years?

    Harvest Gains Before Year-End

    While tax rates should not be the sole impetus for investment decisions, keeping an eye on policies and potential tax rate changes can help you make sound decisions, particularly with the potential for increased rates in the future.

    If you find yourself on the positive end of things, you may want to consider selling appreciated securities to harvest gains that will be taxed at current low rates. Creating these capital gains now allows you to claim them at what Weltman calls, “probably the lowest rates ever.” There are no restrictions on reacquisition of stocks sold for gain, so you can feel free to sell at current rates and reacquire whenever you so choose, letting you increase your basis while maintaining your tax position.

    There are other ways to capitalize on the current tax rates before they expire, in addition to selling for personal gain.

    "If you provide support for your parent who is in the 10% or 15% tax bracket, you might want to give appreciated securities rather than cash and allow your parent to sell the securities and use the proceeds for support,” Weltman says.

    With regards to losses, there is no real tax advantage in acting before year-end. While realizing losses may allow you to reinvest and strengthen a weak portfolio, it is otherwise a wash whether that realization occurs in 2010 or 2011. In fact, investors predicting a bullish market may want to keep their losses unrealized in hopes that they become gains.

    Monday, November 15, 2010

    Facebook Passes EBay in Value, Becoming No. 3 U.S. Web Company


    November 15, 2010, 12:30 AM EST By Brian Womack


    Nov. 15 (Bloomberg) -- Facebook Inc.’s estimated worth is now bigger than EBay Inc.’s valuation, making it the third- largest U.S. Internet business and underscoring the growing allure of social media for investors.

    Facebook’s stock is trading at more than $16 on SecondMarket Inc., an exchange for shares of privately held companies, said a person familiar with the latest pricing data. That would put its worth at about $41 billion, more than EBay’s $39.3 billion valuation on the Nasdaq Stock Market. Facebook only trails Amazon.com Inc., worth $74.4 billion, and Google Inc., valued at $192.9 billion, among U.S. Internet companies.

    “There is certainly good cause for Facebook to have a tremendous valuation,” said Augie Ray, an analyst at Forrester Research Inc. in San Francisco. “It has in fairly short order -- just a couple of years -- gone from being a very niche site to one where the majority of Americans spend a great deal of their online time.”

    Facebook, the world’s largest social-networking site, previously vaulted past other Internet pioneers, such as Web portal Yahoo! Inc. and travel site Expedia Inc. By providing a platform for people to share everything from baby photos to what they had for lunch, Facebook has attracted more than 500 million users and a horde of advertisers hoping to reach them. It’s also a way for people to stay in touch with friends and form new connections.

    IPO Signals?

    The valuation doesn’t indicate what Facebook will be worth in an initial public offering, which could be years away, said Lise Buyer, founder of Class V Group, an IPO consulting firm in Portola Valley, California.

    “It could be a bargain at $41 billion -- we won’t know until it trades on the public markets,” she said.

    The value of Facebook on New York-based SecondMarket has more than tripled in the past year, according to the person, who declined to be identified because SecondMarket doesn’t publicly release trading data. SharesPost Inc., another private exchange, estimated Facebook was worth $40.9 billion last week. That’s up almost 50 percent in the past month, according to the Santa Monica, California-based company.

    Valuations of closely held companies are less precise than those of their public counterparts because trading is limited to a smaller pool of investors and fewer shares are available. Facebook also doesn’t disclose financial information.

    ‘Fundamentally Speculative’

    “We understand there is a great deal of interest and curiosity in our past and potential financial performance,” said Jonathan Thaw, a spokesman for Palo Alto, California-based Facebook. “However, external attempts to forecast revenue or value the company are fundamentally speculative and should be treated as such. We’re focused on building our business to be successful over the long term.”

    The company expects sales of at least $1.4 billion in 2010, up from about $800 million last year, two people familiar with the matter said earlier this year. Facebook may not have an initial public offering until 2012 or later, giving it time to focus on growth, the people said.

    EBay, while still expanding, depends on its online marketplace -- a more mature area than the social-networking industry, said Aaron Kessler, an analyst at ThinkEquity LLC in San Francisco. Analysts estimate that EBay’s revenue will grow 5 percent this year to $9.14 billion, according to Bloomberg data.

    Alan Marks, a spokesman for San Jose, California-based EBay, declined to comment.

    Advertiser Growth

    Facebook makes money from ads and a credits program, which lets people buy virtual items in online games. The company has attracted such advertisers as Coca-Cola Co., JPMorgan Chase & Co. and Adidas AG. It also has maintained ad prices, even as its user growth creates a surge of space for commercial messages, Facebook said in August.

    “As an advertising platform, Facebook has been proven,” said Mark Mahaney, an analyst at Citigroup Inc. in San Francisco.

    Facebook’s users have increased by more than two-thirds since September 2009, when it had 300 million members. In March, the company surpassed Google as the most visited Web site in the U.S., according to research firm Hitwise.

    At AdParlor Inc., which helps companies advertise on Facebook, some customers are spending $20,000 a day on the social-networking site.

    Facebook lets companies craft campaigns to reach specific customers by age, location, hobbies and other attributes, making it more appealing to marketers. They’re also eager to reach all those millions of users, said Hussein Fazal, chief executive officer of Toronto-based AdParlor.

    “It’s getting more attention,” Fazal said. “It’s the sheer amount of volume on the site.”

    --With assistance by Joseph Galante in San Francisco. Editors: Nick Turner, Tom Giles

    To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net

    To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net

    Weekend Update: Jimmy Fallon Buys at 34 Gramercy Park East--Again! | The New York Observer

    Weekend Update: Jimmy Fallon Buys at 34 Gramercy Park East--Again! The New York Observer

    Friday, November 12, 2010

    America's real mortgage rate

    November 12, 2010 12:05 pm

    Record low mortgage rates? Too bad no one is taking advantage of them. Most homeowners still pay around 6% for their loans.




    Mortgage rates dropped to another record low this week following the Fed's move to pump hundreds of billions of dollars into the U.S. economy. Though officials hope that buying Treasuries with newly-printed money will give the slow-growing economy a big boost, the move likely won't give today's homeowners much relief.

    Now is one of the cheapest times in decades to finance a home, but few are actually locking in record low mortgage rates. This isn't just because many don't qualify for refinancing as home prices plummet and banks continue to enforce tighter lending standards.

    It's also because many owners who locked in relatively low rates between 2003 and 2005 don't think it's worth refinancing, according to a U.S. Federal Reserve study of the mortgage market released in September. This is a factor that has largely been overlooked.

    It's true millions have been trying to redo the terms of their home loans to reduce their monthly payments. Yet a sizable group also thinks their current interest rates are at least bearable – they don't want to spend the money or time to take out a new loan for only slightly lower rate.

    Mortgage rates are at their lowest since at least 1971. The rate for a 30-year fixed loan fell to 4.17% in the week ended Thursday from 4.24%, according to Freddie Mac (FMCC). The average 15-year rate declined to 3.57% from 3.63%.

    But interest paid on the vast majority of home loans is much higher than the record rates, according JPMorgan, which tracks the outstanding U.S. mortgages by major lenders including Freddie Mac and Fannie Mae (FNMA). As of October 31, only about 16% of fixed-rate mortgages and 12% on floating mortgages paid between 4% to 4.99%.

    A relatively bigger proportion, about 27%, are adjustable rate mortgages that fluctuate with the market and pay a lower rate ranging between 3% to 3.99%. Still, at least half of outstanding home loans still pay 5% or higher regardless of whether a fix or floating rate.

    Historically when rates have dropped significantly, there's typically a flurry of refinancing.

    And indeed, that happened recently when the average annual rate for a prime-quality 30-year fixed rate mortgage fell abruptly at the end of 2008 and through 2009, falling below 5% in April and May. Refinancing boomed, peaking to more than 645,000 loans in May 2009 before dropping back to monthly levels similar to those seen in 2006 and 2007, according the Fed's report.

    But the recent surge in refinancing doesn't compare to what was seen historically – it's in stark contrast to the levels seen between 2001 to 2003 when rates fell sharply. In 2003 when rates were slightly more than 5%, the volume of refinance loans rose to more than 15 million, markedly greater than volumes in 2009 of about 5.8 million loans.

    "There's a lot of head scratching right now as to why people aren't refinancing," says Freddie Mac Chief Economist Amy Crew Cutts. "The applications are high but the closings are low."

    Cutts points to various factors, including high unemployment, home values falling well below the balances of mortgages and stricter lending standards at many major banks.

    Whatever the reason, it appears homeowners aren't benefiting much from the Fed's policy prescription to accelerate the economic recovery. Who knows how low mortgage rates will go or if it will even matter months from today.

    Source: JPMorgan

    Tags: housing, Economy, Ben Bernanke, Fannie Mae, Freddie Mac, mortgages, US Federal Reserve

    Coldwell Banker On Location Hits 2 Million

    The Real Estalker: Real Estate Run Down: Charlize Theron

    The Real Estalker: Real Estate Run Down: Charlize Theron: "OWNERS: Charlize Theron and Stuart Townsend LOCATION: Malibu, CA PRICE: $30,000 / month SIZE: 2,095 square feet, 3 bedrooms, 3.5 bathrooms ..."

    David Einhorn Is Not Happy With the Fed | The New York Observer

    David Einhorn Is Not Happy With the Fed The New York Observer

    Thursday, November 11, 2010

    Steve Schaefer: Exile On Wall Street

    The Bulls Are Back In Town At Morgan Stanley Smith Barney


    Nov. 10 2010 - 3:47 pm


    Feeling glum about America? Have a conversation with Morgan Stanley Smith Barney chief investment strategist David Darst and the rest of the firm’s global investment committee.

    At a morning briefing with reporters in Morgan Stanley’s 5th Avenue tower Wednesday, Darst and global investment strategist Charles Reinhard both made the case that even with all the short- and long-term challenges facing the U.S. economy, the stock market is in a multi-year bull market and has been since the March 2009 lows. Neither suggested that the market’s path will be an unabated rally to all-time highs, but Reinhard argues that the common preconditions that have marked nearly every 20% correction over the past 80 years are largely absent.

    For one thing, inflation is not a clear and present danger. If it were, you can bet the Federal Reserve wouldn’t be pouring another $600 billion into Treasury purchases. Secondly, there is no irrational exuberance in the market. (Not as many cabbies talking up their stock portfolios as there used to be, right?). Thirdly, the threat of a double-dip recession that would slash corporate profits is in the rear view mirror, and finally the valuation of the S&P 500, about 12.5 times earnings, is at the lower end of the range of the past 20 years.

    The absence of the conditions that typically drive significant corrections makes it an appealing time to be invested in stocks. “Bull markets don’t die of old age, they get assassinated,” Reinhard says, “and we don’t see any of the most common assassins Bull markets don’t die of old age, they get assassinated, and we don’t see any of the most common assassins [looming].”

    Elaborating on Reinhard’s case for a multi-year bull market in stocks, Darst gave a lively talk that started with an outline of the cardinal principles behind the asset allocation strategy at Morgan Stanley Smith Barney, which is owned 51% by Morgan Stanley and 49% by Citigroup..

    Chief among those principles is portfolio protection, akin to Warren Buffett’s “never lose money” credo, but another important consideration is reversion to the mean, or the belief that over the long-term assets tend to move back to their historical averages. Over the last 10 years, large-cap U.S. stocks are among the worst performing asset classes (a pair of burst bubbles will do that to you), and Darst argues that big multinational companies at 11 or 12 times earnings with a dividend yield better than that of a U.S. Treasury are too attractive to ignore. “There are great, big companies sitting out there like Rembrandts in the driveway at a tag sale,” he quipped Wednesday.

    Morgan Stanley Smith Barney likes emerging market equities as well, but Darst points out that there are plenty of U.S. companies that are secretly emerging market stocks. Take casino operators for example. Stocks like Las Vegas Sands and MGM Mirage are wildly outperforming the S&P 500 in 2010, largely because their exposure to the rapidly growing gambling scenes in Macau and Sinagpore.

    The casino stocks illuminate the lesson that playing emerging markets is not the same as shunning U.S. stocks. There are plenty of companies that sell their goods around the world, but are getting overlooked “because they’re headquartered in Cincinnati or Atlanta,” according to Darst.

    Among the host of companies trading at low earnings multiples and offering rich yields that Darst highlights are Dow Jones industrial average components like Procter & Gamble, Johnson & Johnson, Pfizer and Merck. All four offer fatter dividend yields than that of a 10-year Treasury note.

    Follow my blog Exile On Wall Street, or Twitter @SchaeferStreet.

    It's Free to Look: Shia and Carey's Fictional Flatiron Duplex [Pics] | The New York Observer

    It's Free to Look: Shia and Carey's Fictional Flatiron Duplex [Pics] The New York Observer

    The Real Estalker: Let's Discuss Demi Lovato's New Digs

    The Real Estalker: Let's Discuss Demi Lovato's New Digs: "BUYER: Demi Lovato LOCATION: Sherman Oaks, CA PRICE: $2,250,000 SIZE: 4,053 square feet, 4 bedrooms, 4.5 bathrooms YOUR MAMAS NOTES: First ..."

    Coldwell Banker 2010 College Home Listing Report -- Why Everyone Loves T...

    Monday, November 8, 2010

    New York’s Next Frontier: The Waterfront

    Ed Ou/The New York Times

    Manhattan, Brooklyn and Queens as viewed from the Edge, a new luxury condo in Williamsburg

    By MARC SANTORA Published: November 5, 2010

    STANDING on the roof of the Edge, a luxury waterfront condominium project under construction in Williamsburg, Brooklyn, you can’t help but be taken in by the grand sweep of the Manhattan skyline.
    But what Jeffrey E. Levine, the developer whose company is building the Edge, sees when he looks to the north are vast swaths of undeveloped land stretching along the Brooklyn and Queens waterfront.

    “It is a great opportunity to buy land and warehouse it for development,” said Mr. Levine, the president of Levine Builders, which operates Douglaston Development, builder of the Edge.

    Many other major developers, real estate lawyers and city officials are thinking along similar lines. Even with new construction slowed by a troubled financing environment, the groundwork is being laid for the next great phase of waterfront development in the city.

    The Bloomberg administration recently unveiled a draft of a comprehensive waterfront plan, known as Vision 2020, that includes more than 500 prospective projects costing tens of millions of dollars. These range from efforts to increase access to the water for kayakers and canoeists, to measures to protect against rising sea levels resulting from climate change.

    Waterfront Development

    New York City Economic Development Corporation

    An aerial rendering of a proposed development at Hunters Point in Queens.

    “Vision 2020 is a blueprint for the next 10 years and beyond that will change the way New Yorkers live for generations to come,” Amanda Burden, the director of the Department of City Planning, said in October at a public hearing on the report’s recommendations. She said that the goal was for the water to become the “sixth borough.”
    “The water should become a part of our everyday lives,” Ms. Burden declared.

    After years of aggressive rezoning and more than a decade of environmental cleanup, sizable tracts of land along nearly 600 miles of waterfront in all five boroughs are positioned for development. And despite persistent uncertainty in the real estate market, the dozen or more large-scale residential projects that are soon to begin construction, are under way or were recently completed across the city will provide the foundation for that next phase of building.

    That being said, even with the groundwork laid out more clearly than at any time in recent years, a casual reading of the history of development in the city reminds us that the grand plans of today have a way of falling apart if public support, municipal needs and private profit cannot be made to converge.

    Borough by Borough

    The dozens of large-scale plans by private developers are being matched by equally ambitious city projects. A snapshot of a few projects gives a sense of the scope of what could come.

    In Manhattan, where waterfront land is scarce and commands premium prices, construction could begin soon on one of the last large parcels of the Hudson waterfront, in the West 50s, pending approval by the City Council. On the East Side, from South Street Seaport to Harlem — already the site of a new recreational pier — the city is betting that its investment of more than $150 million in new piers, parks and greenways will have the same impact that Hudson River Park had on residential and commercial property values on the West Side.

    In Brooklyn, developers have put forth ambitious plans for construction near established waterfront neighborhoods in Williamsburg and Greenpoint, including a $1.4 billion plan to turn the former Domino Sugar factory into residential housing with about 2,200 units.

    In Queens, the city is planning the largest project of below-market-rate, or affordable, housing to be built in three decades, around 5,000 apartments, on the barren stretch known as Hunters Point. The infrastructure is being put in place to support the new community; developers have submitted bids; the city is expected to pick a winner by the end of the year and to begin construction by spring.

    In the Bronx, the city has rezoned large sections of the waterfront to encourage residential development, including the lower part of the Grand Concourse and Hunts Point. The plan would create a greenway along the Bronx River from Hunts Point to Westchester County.

    And on Staten Island, the old Navy Homeport, a 35-acre decommissioned base, would be developed into a largely residential neighborhood, with the city investing $33 million in road improvements.

    Because one of the traditional hurdles to waterfront development has been lack of public transportation, the city is planning a pilot program that would expand water taxi service along the East River, similar to the service on the Hudson between Manhattan and New Jersey.

    The Groundwork

    The pace of building will generally correspond with broader economic conditions; even so, several projects are already moving ahead, while developers of other parcels are securing approvals and permits so that they can move quickly when the time is right.

    “In the past, when we have faced budgetary constraints, we chose to defer large infrastructure projects,” said Seth W. Pinsky, the president of the New York City Economic Development Corporation.

    “This time we have been able to keep all of our major projects moving forward, and we expect to have shovels in the ground on many of these headline projects within a matter of months.”

    By laying the groundwork now, Mr. Pinsky said, “everything is in place so that when the climate turns, private developers will be able to ride the cycle up from the beginning rather than rush to meet it at the end.”

    The result, over the next decade, could be a market larger by tens of thousands of rental apartments and condos — both affordable housing and luxury homes.

    Of course, grand visions have fallen short in the past — or taken much longer than predicted. Both cityofficials and developers say using the current lull in the market wisely is critical to waterfront development.

    T.F. Cornerstone’s proposed Long Island City development


    Wallace Roberts & Todd
    The community planned for the old Navy Homeport in Staten Island.

    For the more than 250 people who packed into a meeting room in the West Village last month to hear the city’s Vision 2020 presentation, the environmental impact of any planned projects was of most concern. Some also expressed the sentiment that the city was too generous with developers.


    Although the final draft of the plan is not due until the end of the year, city officials say that their goal is to work with developers in order to get them to pay for public improvements, often through specific provisions written into the zoning regulations.

    “This administration’s philosophy has long been to seed investments with public money in order to leverage investments by the private sector,” Mr. Pinsky said.

    That can mean developers’ spending millions on parks, schools, piers and bulkheads — costs that play a role in how they price their properties. In this economic climate, some developers are balking at the city’s demands.

    The Scale of Things

    In New York, waterfront parcels tend to be large, underused industrial sites, making it easier for developers to create more ambitious projects than in developed parts of town.

    For instance, the Edge, on the East River around North Sixth Street, is the one of the largest condominium projects in Brooklyn. It includes a 30-story tower with 360 luxury units, a 15-story tower with 205 residences and lower-rise buildings with 360 below-market-rate units. Mr. Levine plans one more building on the site but is waiting for the economic forecast to improve before breaking ground.

    Similarly, T. F. Cornerstone has been working on an outsize condo/rental development in Long Island City, Queens. In addition to a 498-unit rental building and a 184-unit luxury condo that have been built, four planned rental buildings would add more than 2,600 apartments to the neighborhood and test people’s willingness to pay for stunning views in a neighborhood with few services that is still defining itself.

    “I think in nearly all instances, the type of development and scale of that development on water’s edge is different than what happens inland,” said Jon McMillan, the director of planning at T. F. Cornerstone. On the waterfront, he said, “you have kind of a clean slate.”

    One of the more ambitious undertakings in Manhattan is the Riverside Center complex being built by the Extell Development Corporation. The project, between 59th and 61st Streets along the Hudson River, recently won a key approval from the City Planning Commission despite complaints that its five residential buildings — with nearly 3,000 housing units on eight acres — would overcrowd schools, become an enclave for the wealthy, and skimp on retail space.

    Gary Barnett, the president of Extell, said that the “quantum leap” in demands being put on developers could even now stifle new construction.

    “The question is whether some of these projects will ever get going,” he said. “Is it financially feasible because of all the requirements put on them?”

    He ran through the list of the things he has been asked to do in order to build Riverside Center: pay for part of a new school; use an expensive architectural plan preferred by the city; mitigate environmental problems at a nearby Con-Edison plant; set aside 35 percent of the land as open space; meet retail requirements; and create 500,000 square feet of affordable housing.

    “All of this costs money,” Mr. Barnett said. “All of these projects — and I don’t say mine are exempt — are in danger.”

    Like many of the major waterfront projects, the Extell development has been in the works for years.

    Mr. McMillan, who was the director of planning for Battery Park City from 1985 to 1997, said it had really been only in recent years that Battery Park City had established a firm neighborhood identity of its own, even though it was conceived in 1968.


    Atelier Christian De Portzamparc

    A mock-up of Riverside Center, at right, on the Upper West Side from 59th to 61st Streets along the Hudson River.

    Similarly, projects like the one he is working on in Long Island City will take years to come into shape, but the foundations being built today are critical to the kind of neighborhood that will develop.

    “We are essentially building a community here,” Mr. McMillan said. “When you are starting a new neighborhood, you really do have to start with rental housing to get things started,” in part because “young renters are often willing to make do without essential neighborhood services.”

    In fact, many of the buildings in the pipeline today are likely to be rentals as opposed to condominiums, because they are a safer bet financially. Landlords can always lower rents until the economy improves, then raise those rents and still make money, whereas developers who sell condos at a loss cannot recoup it.

    The economy may be driving some of the changes in the types of projects likely to be built along the waterfront, but large tracts on the outskirts of established neighborhoods allow for greater freedom in design.

    “In Battery Park City,” Mr. McMillan said, “we were going for that ‘Ye Olde New York’ look, paying special attention to historical precedence.” He noted that that meant a lot of brick.

    “Now, I think people are less interested in creating a kind of prewar aesthetic.”

    The city is encouraging higher-rise development right on the water, perhaps reshaping the skyline in Brooklyn and Queens. Advances in glass technology allow developers to be more creative in design as they build communities where none existed before. “The water’s edge is a chance to do something different,” Mr. McMillan said.

    Public and Private

    The city is dictating that most of the new waterfront projects have a below-market-rate component, usually starting at about 20 percent.

    But even with those units, the demand for affordable housing is still overwhelming. The Bloomberg administration hopes that the huge housing project at Hunters Point, on an empty finger of land jutting out from southwest Queens, will help ease the crunch.

    When it is complete, it will rival Co-op City in the Bronx as the largest affordable housing complex in the city.

    Nearly a dozen developers have submitted bids to build apartments for the first phase of the project; the winning bid is to be chosen by the end of the year and construction to begin as early as 2011.

    “The waterfront in the city is so extensive,” said Mr. Pinsky of the economic development corporation, “that we really have the opportunity to do everything.”

    Tuesday, November 2, 2010

    Down Payment: You Need One, Start Saving

    Original Post: http://www.housingwatch.com/2010/11/02/down-payment-now-you-need-one-so-start-saving/

    By Lynnette Khalfani-Cox Nov 2nd 2010 @ 2:48PM


    
    When 30-year-old Kimberly Palmer, and her husband, Sujay Dave, purchased a townhouse this year in a suburb of Washington, D.C., they may have seemed like typical first-time homebuyers. Young, educated and hard-working, the couple also had a newborn daughter, Kareena.


    But they were different from most first-time homebuyers in a critical way. They were able to come up with a 20 percent down payment -- $143,000, to be exact -- to buy their dream home. And they amassed that down payment the old-fashioned way: through years of saving, sacrifice and smart financial decisions.

    Five years ago, amid the housing boom, 43 percent of first-time homebuyers had no down payment. Though that figure shrank to just 15 percent in 2009, mainly due to tighter lending practices, the overwhelming majority of first-time homebuyers still struggle to put 20 percent down.

    According to the National Association of Realtors, the typical homebuyer (including first-timers and repeat buyers) had an average down payment of just 8 percent in 2009, the latest period for which full-year data is available. For first-time buyers, the average down payment was even smaller – just 3 percent. And first-timers accounted for 47 percent of all homebuyers in 2009, a

    Browse through photos of millions of home listings or search foreclosure listingsrecord high. Yet many of those first-time buyers used government-insured FHA mortgages, which only require a 3.5 percent down payment. In 2009, nearly 40 percent of all mortgages were FHA loans.

    For Palmer and Dave, their road to homeownership started after the couple graduated from college.

    Unlike many 20-somethings entering the workforce, Palmer and Dave continued to live like college students until they were in their late 20s. For five years, they didn't buy many new clothes, decided to have one car instead of two, and kept the same one-bedroom apartment -- right down to the same well-worn futon they'd had while in graduate school. "We were so frugal," Palmer recalls. "We barely drove, cooked almost all our meals, and rarely splurged on anything. Even after we got new and better jobs, we didn't upgrade our lifestyle so we could just save more money instead."

    Those five years of saving paid off in January, when the couple closed on a 2,400-square-foot townhouse that cost $715,000 and features three bedrooms and 3½ bathrooms. The home's Bethesda, Md. location – just across the border from the nation's capital – is an added bonus.

    "It's about a 15-minute walk to the closest subway stop, so we could stick with just one car," notes Palmer, who is a writer and the author of a book called "Generation Earn: The Young Professional's Guide to Spending, Investing and Giving Back."

    Asked whether she recognizes how unique she and her husband are, Palmer acknowledges that their accomplishment took hard work. But she thinks that they are part of a growing breed of young, first-time buyers who are more fiscally conservative because they've spent their entire adults lives dealing with economic downturns – first after the Sept. 11 attacks and more recently during the Great Recession.
    Her generation, Palmer says, is keenly aware of the fact that millions of Americans are struggling with house payments that they can not afford, and that one out of four U.S. homeowners is underwater or facing foreclosure. As a result, many of her friends are also buckling down to save over the long haul for a home – rather than rushing into homeownership with a small down payment.

    "From our conversations, it seems like they all agree it's better to put 20 percent down, just to minimize the risk of being overly leveraged in your home," Palmer says.

    "That's a goal a lot of my friends have," she adds. "It might mean waiting longer to buy, though -- that's the sacrifice."

    Monday, November 1, 2010

    The Social Network: From the outside looking in

    Original Post: http://tech.fortune.cnn.com/2010/11/01/the-social-network-from-the-outside-looking-in/

    Interview by Andrea Carter, Poets & Quants. November 1, 2010 11:47 AM



    Divya Narendra at the premiere of The Social Network in New York



    The legal saga continues for Divya Narendra, the Harvard grad who teamed up with the Winklevoss brothers and sued Mark Zuckerberg over Facebook's provenance. Here's Narendra's take on The Social Network and lessons learned from the lawsuit.


    For six years, Divya Narendra has been in a fiery legal dispute with Zuckerberg, alleging that he stole his concept for ConnectU and capitalized off of it with a little known social networking site called Facebook.

    In 2008, he and his partners, twin brothers Cameron and Tyler Winklevoss, signed a $65 million settlement agreement containing a mixof cash and Facebook stock. The settlement is still in dispute, Narendra says, due to a lack of disclosure regarding Facebook's stock valuation.

    Now, with The Social Network in movie theaters, the saga continues on the big screen.

    Still, the New York City native insists that he is not bitter. He is keeping himself busy with a new Internet venture for investment professionals called SumZero while pursuing a JD-MBA at Northwestern Law School and the Kellogg School of Management.

    Here's what he had to say about Facebook and Zuckerberg, The Social Network, and his next steps.

    How did you come up with idea for your social site project while at Harvard?

    During my junior year, I realized that there was no online platform for Harvard students to connect with one another regarding academics, student life, and campus news and events. That's when I came up with the idea for ConnectU, an online community that could benefit students and alumni at Harvard as well students at other colleges in the Boston area. Thinking long-term, I knew ConnectU could also be used by students at colleges across the country.

    This was during the 2002-2003 timeframe so the idea was partly inspired by sites such as Friendster and MySpace. The problem with these sites, however, was the lack of quality control and membership screening, resulting in a proliferation of fake profiles. The key realization that I had was the need to build an online community for Harvard where you could screen users by their email addresses. By requiring a "Harvard.edu" email, we could ensure that those who registered had an actual affiliation to the institution.

    Upon coming up with the idea, I asked two of my friends to join me, Cameron Winklevoss and Tyler Winklevoss. The twins were very excited and we got to work immediately.

    When did Zuckerberg join the project

    Together, we had a good mix of technical skills and entrepreneurial spirit, but none of us had programming expertise. We asked around campus to see who at Harvard knew how to web program. Mark Zuckerberg was brought on board to fill the missing link. Little did we know, while he was supposedly developing ConnectU, he was using our concept as the foundation for a competing venture of his own. Three months later, we were stunned to read about thefacebook.com in The Harvard Crimson.

    After graduation in 2004, we filed a lawsuit and the litigation proceedings have been ongoing for the past six years.

    What did you think of The Social Network?

    This part of the whole experience has been completely surreal. I first saw the film in Chicago, then in New York City for the premiere.

    Initially, I was surprised by the actor [Max Minghella] they chose to portray me because he didn't look anything like me. But I thought the film was entertaining and had a lot of funny one-liners. The writers also did a good job of telling the story from multiple perspectives.

    What's keeping you busy these days?

    After leaving Harvard, I went to New York City to work in the mergers and acquisitions group at Credit Suisse (CS). There, I gained an interest in value investing and, in 2006, I returned to Boston to work at a hedge fund called Sowood Capital Management where I analyzed investment opportunities across the capital structure.

    This is where the idea for my new company, SumZero, was born. While I was at Sowood it occurred to me that there was no trusted online platform that existed for hedge fund managers to trade ideas about equities, credit, and other types of securities.

    Inspired by Wikipedia, I wanted to create a universal, encyclopedic database for investment ideas. However, unlike Wikipedia, content contributors would be limited to hedge fund, mutual fund, and private equity analysts. Typically, you don't see this group exchanging ideas out in the open because the information is so proprietary.

    In 2008, I launched SumZero and today we have 4,300 analysts and portfolio managers from all over the world sharing ideas on the site.

    Looking back, would you have done anything differently?

    When I was 21, I never expected to be embroiled in litigation with a fellow college classmate. I was just another student excited about a start-up idea looking forward to bringing it to the market.

    Today, I'm more conservative in developing relationships with potential partners. I'm also more disciplined. For young entrepreneurs, I would recommend thinking about ideas that can have a far reaching impact on the world, but also thinking about what can go wrong given the inherent risks of business.

    But when I think about it, had I known how to program, I wouldn't have had the need to contact Mark in the first place [laughs].

    Tags: Facebook, Mark Zuckerberg, Social, The Social Network, sumzero, Divya Narendra

    Wednesday, October 27, 2010

    The housing crisis in 1933, and today


    The real-estate market is suffering now, but it was worse then


    By Lew Sichelman


    Realty Q&A is a weekly column in which Lew Sichelman, a nationally syndicated columnist who has been covering the housing market for more than 35 years, responds to readers’ questions on real estate.

    WASHINGTON (MarketWatch) — Question: I know that the New Deal created the Home Owners’ Loan Corp. I have been eager to read an article by someone who has looked at the way that mortgage crisis was handled ... and compared it to government efforts in our present crisis. If you are familiar with anything written on this subject I would appreciate your informing me where to find it. If you are not aware of anything, I might suggest that you would be an excellent person to explore it. —M.N.



    Answer: Actually, you’re in luck. I do know of one such study; it was done a few years ago by Alex Pollock, a resident fellow at the American Enterprise Institute in Washington and the former president of the Federal Home Loan Bank of Chicago.

    Pollock looked back to 1933, when Congress created the Home Owners’ Loan Corp. as a temporary fix “to relieve the mortgage strain and then liquidate.”


    While the current mortgage meltdown and resulting — or corresponding, depending on your point of view — housing bust has been described as the worst since the Great Depression, it is nothing when compared to what happened in ‘33, when a financial and economic collapse occurred that is all but impossible to imagine today.

    Back then, about half of all mortgage debt was in default. Unemployment reached 25%, thousands of banks and savings and loans had failed and annual mortgage lending had fallen by some 80%. New residential construction had dropped by 80% as well.

    The prelude to the crisis might sound familiar. It was a period of grand economic growth and overconfident lending and borrowing. The 1920s featured interest-only loans, balloon payments, an assumption of ever-rising prices and the firm belief in the easy availability of a string of refinancings.

    And then came the crash, the defaults, and the markets froze.

    By comparison, only 2.95% of mortgages as of Oct.1, 2007, when Pollock wrote his paper, were labeled seriously delinquent, meaning roughly 1.5 million loans 90 days past due or in foreclosure. That’s risen to 9.11%, as of the second quarter this year, according to the latest figures from the Mortgage Bankers Association. Read more on foreclosures drop, but delinquencies rise, in MBA's second-quarter report.

    In sheer numbers, that’s a lot of troubled borrowers. But as a percentage of a much, much larger base than in the early ‘30s, their number is relatively small.

    How to fix the problem

    Of course, if you are one of those who is unable to make mortgage payments, or are facing the prospect of an unaffordable house payment, you don’t want to hear about percentages. You want help, if not from your lender, then from your government.

    Lenders claim they are doing their damnedest to work with delinquent borrowers. But consumer groups say they need to do more, and the public discussion is full of proposals at both the state and federal levels for some sort of government intervention.

    The current debate about what to do is a common theme that follows almost all housing busts, Pollock said. “This is a recurring phase,” he wrote in his paper. “There is a political imperative to do something. History is clear that government actions are always taken. It is only a question of which ones.”

    While there is certainly no dearth of ideas on how to fix the mortgage markets, Pollock suggested that it is well worth taking a look at what was done to clean up the 1933 bust and save millions of homeowners from catastrophe.

    Historical perspective


    Since AEI is a private, nonpartisan, not-for-profit public policy research institute, and since neither AEI nor Pollock have a dog in this fight, it seems to me to be a good idea to peer backwards before trudging forwards, if only because it is always good to bring some historical perspective to any issue of such magnitude.

    Seventy-seven years ago, with a law that took only 3½ pages of text, Congress created the Home Owners’ Loan Corp. to acquire defaulted residential mortgages from lenders and investors and then refinance them at more favorable and sustainable terms.

    In exchange for the loans, lenders would receive HOLC bonds. While the bonds would earn a market rate, the rate was lower than that of the original mortgage, But since the bond took the place of what had become a non-earning asset, and one with little prospect for ever turning a profit, banks eagerly agreed to the trade.

    In addition, lenders often would take a loss on the principal value of the original mortgage. This, according to Pollock, was “an essential element of the reliquification program, just as it will be in our current mortgage bust.”

    The Home Owners’ Loan Act called for the directors of the government-sponsored corporation to liquidate the company when it’s “purpose had been accomplished” and pay any surplus or accumulated funds to the U.S. Treasury. In 1951, during the height of another housing boom, they did just that, closing the pages on a period of history that has long been forgotten.

    Eighteen years was probably a little longer than lawmakers originally expected. But during its life, the Home Owners’ Loan Corp. made more than a million loans to refinance troubled mortgages, according to Pollock, who had spent 35 years in banking when he left the Chicago Fed in 2004. That’s about 20% of all mortgages in the country at that time.

    By 1937 alone, in what the AEI scholar calls a “remarkable scale of operations,” the Home Owners’ Loan Corp. owned almost 14% of the dollar value of all the nation’s outstanding home loans.

    HOLC’s investment in any mortgage was limited by law to 80% of the underlying property’s appraised value, with a maximum of $14,000. With an 80% loan-to-value ratio, then, the maximum house price that could be refinanced would be $17,500.

    A mere pittance, by today’s standards. But that was in 1933 dollars. After adjusting the $17,500 ceiling by the Consumer Price Index, the maximum today would be about $270,000, Pollock said. And based on changes in the Census Bureau’s median house price since 1940, the limit would be something on the order of $1 million.

    Therefore, Pollock contends in his paper, a modern HOLC could very well operate all over the country, even in high-cost markets like California and New England.

    The 1933 law also set an interest rate ceiling of 5% on the new loans HOLC could make to refinance the old ones it acquired. The spread between this rate and the cost of the bonds the HOLC Corp. issued averaged about 2.5%, according to Pollock. And with long-term Treasury rates now at about 4%, an equivalent spread would lead to a loan rate of about 6.5%.

    That may be a tad higher than some borrowers would like. But at least it would be a fixed rate, never to change over the loan’s life. Read more on mortgage rates fall to new record low.

    According to Pollock, HOLC tried to accommodate as many borrowers as possible. But there were some borrowers that could not be rescued, no matter what. Eventually, it foreclosed on about 200,000, or 20%, of its loans. In other words, for every four borrowers who were saved, another family lost its home.

    An acceptable outcome? Maybe, maybe not. But since each and every home owner who refinanced through this program started in default and was close to foreclosure anyway, Pollock, for one, says the result was “quite respectable.”

    “We don’t need something of the same scale” this time around, Pollock said of the HOLC, which had as many as 20,000 employees. “But I think the concept offers a pretty intriguing historical perspective. What I especially like about it is that it set up to do a job, and when it was done, it closed down.”

    Nationally syndicated columnist Lew Sichelman has been covering the housing market for more than 35 years. Because of the volume of mail he receives, he cannot answer individual questions, nor can all questions be answered in this space. Email lsichelman@aol.com