Juicy Finds in Commercial Real Estate
One of the ongoing long-term discussions around Chez Melvin revolves around real estate. This group is probably the best reflection of the U.S. economy, and it impacts a wide range of other sectors. Certainly it plays heavily in banking, one of my favorite patches. In 2007, my curmudgeonly, options-trading friend picked up on the excesses of 2007 by observing his real estate friends. As for myself, back in 2009 I spotted the obvious under-valuations in hotels and shopping centers -- thanks to at least a rough idea that I'd had of the replacement value of commercial properties. One of the first things I do when I'm checking out a bank is to look at the type and location of its real-estate-lending portfolio.
In the aforesaid discussions, we've even talked about expanding from just stocks and bonds into property acquisition, management and brokerage. Although we have seen an improvement in many real-estate markets around the U.S., the space is nowhere near the levels it had reached in 2007: The Moody's/RCA Commercial Property Price Indices are still 23% below the pre-bust highs. If you take the red-hot apartment sector out of the mix, the composite is even further away from the highs. Sectors like suburban offices and retail properties, for instance, are still at very low levels....546 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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