Thursday, July 9, 2009

Treasury Picks 9 for PPIP

Some big commercial real estate players on the list:

Following a comprehensive two-month application evaluation and selection process, during which over 100 unique applications to participate in Legacy Securities PPIP were received, Treasury has pre-qualified the following firms (in alphabetical order) to participate as fund managers in the initial round of the program:

  • AllianceBernstein, LP and its sub-advisors Greenfield Partners, LLC and Rialto Capital Management, LLC;
  • Angelo, Gordon & Co., L.P. and GE Capital Real Estate;
  • BlackRock, Inc.;
  • Invesco Ltd.;
  • Marathon Asset Management, L.P.;
  • Oaktree Capital Management, L.P.;
  • RLJ Western Asset Management, LP.;
  • The TCW Group, Inc.; and
  • Wellington Management Company, LLP.
The AG&Co/GE Partnership has at least $5 billion of real estate AUM between them, and each have well-known and highly-thought-of management teams. I would guess BlackRock has somewhere in the neighborhood of $3 billion. Marathon $800 MM and Oaktreee $600 MM. (Pure guestimations on my part -- I'm sure their respective websites include some information on the real estate portfolios.)

What strikes me, though, is (a) the fact that so-called "manipulative" and "excessively speculative" hedge funds and private equity funds are pretty much the only ones chosen, and (b) how distressed Oaktree and Marathon's real estate portfolios are. These are the managers Treasury chose?

I guess since the Treasury itself is trying to manipulate markets and overpay for assets, some of these selections make a little more sense.

Monday, July 6, 2009

What a bizarre two years it has been...

I originally started this blog in 2007, when it was common that trophy commercial real estate assets would trade for 3% cap rates (cap rate = property-level net operating income divided by property value). I felt the market correction coming -- albeit not nearly to the extent that we are experiencing today, nor the extent to which I think we'll see in the next couple of years.

Two years later, I'm at my second company since leaving the boutique i-banking firm, including 15-month pit stop at one of the biggest hedge funds on the Street (where my strategy proceeded to blow up). And I, like everyone else, am wondering -- where do we go from here?

The people who used to read this blog are probably long gone. Most who worked in the CRE industry in New York have left for less-competitive locales. So I'm really just posting this to see if it's picked up on anyone's RSS feeds.

I dropped everything when I went to the hedge fund to focus 100% of my time on the strategy. Now that I have a bit more time on my hands, I'll probably resume blogging regardless of whether anyone reads it. It's amazing to me that since I started this, there still have been no blogs about commercial real estate that have popped up given everything that's going on. It's an incredibly interesting time, yet no one seems interested.