Archive
Commercial Medical Office and Facility Investments Are They The Next Big Thing?
As Health Reform becomes law will there be a big play in the medical office and care facilities? Stories abound about how the new health reform will be a huge boon to the commercial markets. Is this so and at best doesn’t this just increase competition in a very speculative way?
It is reported that there may be a need for another 60 million sq. ft. of medical office space alone and big investors like pension funds and insurance companies need to spend huge amounts of stockpiled cash, sooner than later.
If this is true I would suggest getting in early and leaving just as early as the need to invest in this current environment may start a frenzy that could bubble.
What are your thoughts?
JW Najarian
The Distressed Assets Association is Growing
In June of 2009 3 guys came together to discuss a new venture.
CREDAA is the brainchild of Scott Miller and Warren Samek, both National Commercial Account Executives with Fidelity National Title in Seattle, WA and JW Najarian, formally a commercial lender with Pathfinder Commercial Mortgage and the Founder of The Commercial Real Estate Professional Investor Group out of Los Angeles.
After the real estate and stock markets fell in September of 2008 the founders envisioned a commercial real estate collapse coming as the CRE market tends to lag just around 2 years from the residential market. We believe now that due to the magnitude of the market and residential market crashes, the commercial collapse is happening at a quicker pace.
Due to the TARP plan we believe the banks are holding troubled assets at an alarming rate and furthermore, that if these assets are held too long, that the market recovery will be much longer than it needs to be.
The founders came up with the idea that if the industry had a place to be able to work together at finding solutions, that the recovery could be sped up. The founders believe that an association of industry professionals and investors can, given the most current information, data and education, find and implement solutions that will help banks, brokers, lenders, investors and property owners re-work or get out from under troubled assets with the least losses.
CREDAA was founded in pre-launch on August 20th 2009.
CREDAA now has twenty two commercial industry and business leaders from many diverse skill sets.
It is CREDAA’s goal to provide brokers, lenders, banks, investors and other CRE industry professionals, education, solutions, resources and other support to help them in the disposition, acquisition, valuation and financing of CRE Distressed, Toxic, Unstable or troubled assets and non-performing notes. Become a membership of companies and individuals operating in the commercial real estate, investment, finance, and banking industries.
JW Najarian
FDIC wants to Securitize $36 Billion in Failed Assets
This is seen as a milestone in the government efforts to rid the banking system of troubled assets according to Financial Times.
In the 80’s the FDIC created the Resolution Trust Corporation (RTC) and it is reported that the RTC guidelines may come into play once again.
I have no issue with the RTC plan if managed correctly, but I am concerned about the FDIC selling AAA rated bonds based on these troubled assets (why do we call them assets?).
Securitization seemed to be one of the major issues that got us in this mess. Also the underlying assests could loose value. I am not a financial guru, but although this would be good for the investor (maybe), as they would not take losses; the government still could and that burden, I believe, would now fall on the backs of the already strapped tax payer.
I would really like to hear what you have to say on this.
JW Najarian
Obama Takes on Big Banks
President Obama Takes on Big Banks: ‘If They Want a Fight, That’s a Fight I’m Willing to Have’
January 21, 2010 12:28 PM
ABC News
Jake Tapper and Sunlen Miller report:
Two days after the voters of Massachusetts sent a Republican to the Senate for the first time since 1972 – many of them fueled by populist anger at Washington, DC, and Wall Street – President Obama used fiery, populist rhetoric to introduce new regulations on the financial industry — almost daring the financial sector to take him on.
“Never again will the American taxpayer be held hostage by a bank that is ‘Too Big to Fail,”the president vowed, suggesting ways to limit the size and scope of financial institutions.
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I understand the need to keep banks and financial institutions from being reckless in their dealings, but they do need to be able to be risky as there is no growth without risk. We all know what happens when the banks are not willing to take on risk. It is happening right now as we speak.
The president, today used the phrase “Too Big to Fail” which I believe is very popular right now due to the books by Gary H. Stern, Ron J. Feldman and Andrew Ross Sorkin. Gary and Ron are, officers with the Federal Reserve, who warn that not enough has been done to reduce creditors’ expectations of TBTF protection. Many of the existing pledges and policies meant to convince creditors that they will bear market losses when large banks fail are not credible, resulting in significant net costs to the economy. The authors recommend that policymakers enact a series of reforms to reduce expectations of bailouts when large banks fail. Andrew Sorkin writes about the incredible story of the recent bank crises.
I am a bit afraid that the government will get over zealous and give too much power to the fed unless you trust them not to corrupt, misuse or just F-up. Big companies need big banks and financial institutions and it is true that unchecked or unregulated projects and activities of these big banks can lead to financial disasters which the American taxpayer bears the brunt for.
So what is the answer? It is hard to say, but it seems that we have to be careful not to tie the hands of these institutions while making sure that past policies that open the door to corruption are closed. It does make sense that if an organization does well and makes a profit then they should get paid and if they fail or screw up they should lose and not get bailed out.
Over leveraging and black box financial schemes need to really be looked at. I understand protecting your corporate secrets, but if you have nothing to hide you hide nothing and over leveraging by the homeowner, developers, investors, large banks and financial institutions have caused nothing but kaos.
I would love to hear your comments and thoughts.
Here are the Amazon Links to the books mentioned:
Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System—and Themselves
Too Big to Fail: The Hazards of Bank Bailouts
JW Najarian
$25 Million Bilked from Friends and Relatives by Well Known Hedge Fund Gets Manager 10 Years in Federal Prison
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21017 / April 29, 2009
Securities and Exchange Commission v. Bradley L. Ruderman, Ruderman Capital Management, LLC, Ruderman Capital Partners, LLC, and Ruderman Capital Partners A, LLC, Civil Action No. CV 09-02974 VBF (JCx) (C.D. Cal.)
SEC HALTS BEVERLY HILLS HEDGE FUND FRAUD
SEC: Bradley L. Ruderman, Ruderman Capital Management, Fleeced Hedge Fund Investors
Posted by admin in Featured Articles, Uncategorized on 04 30th, 2009 | no responsesBradley L. Ruderman of Los Angeles has been charged with defrauding investors and lying about his hedge funds, the SEC said.
Ruderman made at least one Ponzi payment, and falsely told investors that Lowell Milken, chairman of the Milken Family Foundation and Michael Milken’s younger brother, and Larry Ellison, chief executive officer of Oracle Corp., invested with him.
01/11/2010
HEDGE FUND MANAGER WHO BILKED RELATIVES OUT OF $25 MILLION SENTENCED TO OVER 10 YEARS IN FEDERAL PRISON
US Department of Justice
After admitting that he ran a Ponzi scheme that targeted family members and close friends and caused them to lose more than $25 million, the founder and manager of two Beverly Hills hedge funds was sentenced today to 121 months in federal prison.
Bradley L. Ruderman, 46, of Beverly Hills, was sentenced this afternoon after pleading guilty in August to two counts of wire fraud and two counts of investment adviser fraud related to a Ponzi scheme he ran from 2003 through 2009.
United States District Judge John F. Walter sentenced Ruderman for collecting more than $44 million from investors in his two hedge funds – Ruderman Capital Partners and Ruderman Capital Partners A – based on promised annual returns as high as 60 percent. Ruderman admitted that he used much of the money to pay his own expenses and that he hid the misappropriation of investor money from his victims by sending them phony account statements that purported to show gains in their accounts. When the funds collapsed last April, Ruderman’s investors had lost more than $25 million.
This case, like Bernard Madoff’s case, allows us to see that due dilligence is not always enough. Ruderman seemed to have the resume and clients to back up his lie.
What can we learn here:
- Do Your Due Dilligence
- Make Sure You Understand How the Firm Makes the Returns (No Black Box)
- Do Not Put All Your Investment Capital in One Investment, No Matter How Great the Return
- If it Sounds To Good To Be True…. It Probably is
- Pull Out Your Returns Every So Often. Do Not Let It All Ride
JW Najarian
Obama proposes a “responsibility fee” on nations largest banks
Biztimes.com
Obama proposes ‘responsibility fee’ on largest banks
Thursday, January 14, 2010
To ensure that taxpayers’ dollars from the Troubled Asset Relief Program (TARP) are recovered, President Barack Obama proposed today a new “financial crisis responsibility fee” on 50 of the nation’s largest financial firms.
“My commitment is to recover every single dime the American people are owed,” Obama said. “That’s why I’m proposing a Financial Crisis Responsibility Fee to be imposed on major financial firms until the American people are fully compensated for the extraordinary assistance they provided to Wall Street.”
The new tax would apply to banks with assets greater than $50 billion each and would help reduce the federal deficit, according to the administration. The Obama administration estimates the new tax will raise $90 billion over a minimum of 10 years.
Read More…. http://www.biztimes.com/daily/2010/1/14/
It was once thought that these institutions were too big to fail. None of us probably believe that now, though many would argue that we will never know based on TARP bailout.
Won’t this keep banks from getting too big? Don’t we need big financial institutions to provide for big business?
What do you think?
JW Najarian
Good Riddance to 2009 and the last Decade. Welcome 2010?
As my father was in the Air Force we were stationed overseas, when I was a young lad. We spent 3 years in England. I have so many wonderful memories of my time there, and maybe it was because I was young, but what I remember most were various sayings, slang and colloquislisms.
One of my favorite sayings was “Good Riddance to Bad Rubbish”. Since I was there in the early sixties, you still heard things like “Chip Chip Cheerio” (a way to say goodbye in british slang) and all that sort of rot. So that is the genisis of the title.
Anyway that is a whole minute of drivel you will never get back… Sorry.
OK so it looks like I hate the last 10 years…. Hate is a harsh word, but I would say it has been a roller coaster for many. Do you realize the changes that have occured in the last decade? The digital age is flourishing and this is just the beginning. Twitter, Facebook, the iPhone, digital cameras to name a few.
September 11th, which was the catalyst for starting one of the longest periods of war we have ever had. The tech bubble, the real estate boom and now bust. Our first African American President.
There have been highs and lows and personally my life was pretty blessed. We are now coming into what I believe is a long recovery. This recovery will not be a straight line back, but more of a roller coaster at times.
So how about the next 10?
Do I welcome them or cringe as I think about the hardships and pain many will have to endure? To be honest, even though I have been writing about gloom and doom lately, I am very optimistic. We can not continue to do the things we have done in this industry over the next ten years and survive. We have to come up with new and better paradigms as these are new times. We have to embrace technology as it is not going away. Many I have talked to lately tell me that most of the people that count in this industry will not utilize social networking and technology tools. Let me tell you that as I have been in the technology field for over 30 years, on thing is absolute; change or die.
Remember the fax machine, the cell phone, the microwave, ATM cards, email? What do they have in common? They were all new technologies at one time that people avoided like the plague, until a tipping point occured when you either had to succomb to the inevitability that you had to change or be left dangling in the cold.
Don’t wait to learn how to use social media and the Internet for more that checking your spam ridden email accounts.
We have started the Commercial Real Estate Distressed Assets Association (CREDAA) and we know we will not cure the world of poverty and hunger or come up with a new cancer cure, but we will be working to educate and find solutions to our current commercial real estate dilemmas.
I look forward to working with industry professionals, bankers and investors to find the best solutions to end the madness that is our current situation. We at CREDAA really believe that the holding of assets by banks, the FDIC and other authorities, is a recipe for disaster and at least it will cause our recovery to last so much longer than need be.
We do not believe CREDAA will save the world, but we will be active at trying to help turn around a small portion of it. Margaret Mead wrote “Never doubt that a small group of thoughtful, commited citizens can change the world. Indeed it’s the only thing that ever has.”
We invite you to join us in our quest to go from Reactive Survival Mode to Educated Self Empowerment Mode which will lead us to the land of Sustained Abundance and Prosperity. www.CREDAA.com
Happy Holidays to you and yours
JW Najarian
Current and Performing Mortgages fell for the 6th Straight Quarter
This according to Street Signs on CNBC.
Serious U.S. mortgage delinquencies rise 20% in 3rd quarter
http://www.chinaview.cn 2009-12-22 03:46:36
WASHINGTON, Dec. 21 (Xinhua) — Serious delinquencies among U.S. prime mortgages rose nearly 20 percent in the third quarter from the prior quarter, indicating that the country’s housing financial market remains in trouble, according to a report released by U.S. banking regulators on Monday.
The report by the Office of Comptroller of the Currency and the Office of Thrift Supervision, which are banking regulatory agencies of the Treasury Department, covered about two-thirds of all U.S. mortgages.
Few borrowers helped by modified mortgages
Associated Press (msnbc)
updated 8:46 a.m. PT, Mon., Dec . 21, 2009
WASHINGTON – One of the biggest challenges to ending the foreclosure crisis is this: A surprising number of homeowners who get their monthly payments reduced fall behind again within a year.
When borrowers get into financial trouble, lenders have several ways to help. They can offer grace periods, longer repayment schedules, lower interest rates or reduced balances.
I know we have been hearing story after story about how the housing market is coming back. How many are making money flipping and new home sales are way up. None of these stories are false, but they are probably based on misconceptions that the market has hit bottom and the economy is stablizing. Housing has still not grown as much as most other sections of the market recently.
Real Estate is location based and we have hit the bottom in some markets and are on the upswing in others, but overall nothing is over yet. Most new home sales have been the result of tax credit stimulus. Also the economy is far from on the upswing even though we had great GDP numbers in the 3rd quarter of this year.
According to the Bureau of Labor Statistics the numbers are not looking bad this quarter compared to previous, but all the news I hear is that unemployment may tick up to 10.5. It looks more like confusion to me and 2010 looks like it will be another choppy year as the numbers jump up and down. Like GLD did today as it dropped from it’s recent highs by 50%.
Can this market sustain new home sales numbers as foreclosures are still growing even amongst more credit worthy buyers? If fundamentals count the deck seems to be stacked against sustained growth this next year.
JW Najarian
Banks to Spend 2010 Coping with Commercial Mortgage Maturities
National Real Estate Investor
Dec 16, 2009 12:54 PM, By Sibley Fleming
As billions of dollars in commercial debt comes due over the next two years, with many loans originated from 2005 to 2008 underwater, the need for capital will skyrocket. Of the $3.5 trillion in commercial mortgage debt outstanding, more than $1.1 trillion is needed to service that debt. That’s according to a new 2010 forecast from New York-based financial analyst Keefe, Bruyette & Woods (KBW).
The scarcity of cash will be most acutely felt in the banking sector, which holds some 80% of the approximately $500 billion in commercial debt that will mature through 2011.
Regional banks are particularly weighed down with commercial mortgages and will have a tough row to hoe in 2010. According to the KBW Quantitative Research Group, 300 banks had more than 25% of their loan portfolios in commercial mortgages at the end of the third quarter.
This is why CREDAA exists. I read that the market is up and new home sales are up and they will probably be up till the middle of the year when incentives are due to end. I am sure they will create new incentives, but the story is the same.
Without the grass roots efforts of the commercial financial industry coming together to find solutions and staying on top of current situations and trends, it is my belief that a recovery will take an enormous amount of time.
CREDAA is working to build alliances with industry leaders with the experience to figure it all out and we will be announcing programs we have found that have great solutions in the months ahead.
RIISnet is one of the platforms we feel the industry needs to move forward with realtime valuation and quick asset turnaround. If you have not been on a Tuesday evening call; you are missing an amazing opportunity.
If everyone keeps doing the same old thing and expecting a different outcome then…… You get the picture.
Come to CREDAA and participate. We have an amazing plethora, cocophany and cornucopia of information and services we will be delivering soon.
FYI – CREDAA is already amazing and if you are not using it daily you are missing out.
Here are the features we already provide:
• My Page – Area where members can store data about themselves including headshots, profile, general info, pictures and other pertinent data to introduce themselves to other members. Member’s profile is also totally configurable to choose colors graphics and what messages they do and do not receive.
• Private email service – Send and receive emails from other members and with free site email address.
• Discussion Forum – This allows members the ability to discuss anything pertinent to the distressed market with other members. Forum also allows uploading pictures and attachments and can take html formatted text.
• Chat Forum – Real-time forum for open discussion on news and issues in the industry
• Blog – A member can read or write blogs on various topics associated with the distressed markets. The blog also allows uploading pictures and can take html formatted text.
• Groups – A member can join an existing group or create their own group based on membership needs. Within groups there is the ability to have discussions pertaining to your group.
• Events – Members can find industry and CREDAA events as well as post their own events
• Pictures – Members can search for particular pictures or post pictures for other members to see.
• Videos – Members can search or post industry videos for other members to see.
• News – Current 24/7 Industry news from across the web including blog posts from other industry services.
• CREDAA TV – Allows members the ability to view current and automatically updated distributed videos from major broadcasters like NBC, FOX, Bloomberg and others on FDIC, TARP FNMA, distressed, toxic, unstable and troubled notes and asset news.
• RSS – All features including personal have RSS capability
• Graphs and Analytics – CREDAA has standard and proprietary data, graphs and analytics for the distressed, unstable, toxic, troubled assets and notes industry.
• Member Search – CREDAA has a low level search to find members fast and a premium search ability to find resources and providers in the industry based on multiple criteria.
• Alliances – CREDAA has and will continue to create and foster alliances with industry leaders that we believe have workable solutions to the many issues faced by banks, brokers, lenders, property owners and investors in the commercial real estate industry.
The news service alone is increadible. We search out the WHOLE Internet for all blog stories and news items that deal with distressed, troubled, unstable, toxic assets and notes and serve them up to you in one easy to read place.
CREDAA TV is not just some kidstuff You Tube fun package. Again CREDAA uses a service to automatically serve you the latest troubled assets videos from video news feeds like NBC, FOX, Bloomberg and many more so you don’t have to search the world for the most up to date news, views and information
If we are missing something. Come and discuss it on the Forum or Blog it to the world.
JW Najarian
Commercial Unstable, Distressed, Toxic, Non-Performing Notes, Assets, Property
There are a lot of terms being thrown out today when discussing the commercial real estate market’s unstable asset classes. Which one is the proper term to use?
To me they all mean the same thing and if you look up the definitions they only vary slightly, but the street seems to have mad a differentiation between Distressed Assets meaning; probably bank owned REO and Non Performing which seems to speak to notes in pre foreclosure. I use unstable assets to mean both REO and Non-Performing, which is probably wrong and CNBC and MSNBC seem to like the terms Toxic Assets to describe these asset classes. I am sure that the word toxic seems to conjure up more evil and enticing response for the media.
I would love some clarification on what terms you are using and what is the correct usage of the terms.
I will post the best answer on The Commercial Real Estate Distressed Assets Association Website. www.CREDAA.com
CREDAA is in pre-launch and is looking for members that engage in the disposition, acquisition, valuation, finance, development or outcome of these various classes of commercial assets.
CRE Distressed Assets Association Blog 