Sam Zell Fundamentals ‘Samisms’

Sam Zell has some Samisms, Zell Fundamentals which are profoundly simple yet highly meaningful in contributing to his success.  These fundamentals are often forgotten as investors navigate their way through making investment choices and real estate deals.  Among the Samisms are, ‘Understand the downside’.  Simple, yet we often are so convinced of the positive deal attributes it is difficult to even consider what might go wrong.

I heard once, ‘Don’t fall in love with anything which cannot love you back’.   It reminds me of the Samism, ‘Sentimentality about an investment leads to lack of discipline.’   For deal junkies, those of us who love commercial real estate, look at it when we do not have to, think about it when we do not have to…. We do get excited about CRE investments.   Perspective.  Don’t lose it.

Zell Fundamentals---Samisms:

http://www.egizell.com/fundamentals.html#rule1

2012 Forecast Looking Up

2009 is now a distant memory.  During 2011 life insurance companies had an excellent year of loan origination at $45 Billion. 2012 promises to be even better.   Underwriting standards have improved as lenders compete for the highest quality transactions.  The Commercial Mortgage Banking Conference (CREF) was held in February.  Attendees include commercial mortgage bankers, life insurance company lenders and CMBS lenders.  The conference began a fever of activity and re-pricing as lenders gathered intelligence about the competitiveness of the market.  Surely underwriting will become more aggressive during the year as competition heats up further.

This will be a year of continued low, long-term interest rates, competitive pursuit of the highest quality transactions and the return of CMBS as a real source of debt capital, barring any unexpected blips in the financial markets.  Five-year rates are in the 3.0’s, 10-year rates are in the 4.0’s.  Favored property types continue to be multi-family, grocery-anchored retail, multi-tenant industrial and single-tenant credit properties.   2012 is going to be a great year for the permanent debt capital market.