We all know that the GSE's have been extremely active (and profitable) in the multifamily debt markets lately despite the broader market fallout and impending bailout.
The question that I ponder daily is: Will Fannie and Freddie continue to be the go to source for multifamily finance as we move towards 2009? And if not, what are the alternatives?
In somewhat interesting industry news today, Fannie Mae pulled out of further investment in the "The Mid-America Multifamily Fund I" which was a three year joint venture with Mid-America Apartment Communities on a goal to raise $500MM for acquisitions. Certainly makes sense given their focus on capital preservation, but it also gets you thinking about the potential collateral damage outside the debt markets.
Here is an excerpt from the Reuters article:
Fannie Mae halts purchases for Mid-America Fund
"While we will be the first to acknowledge that direct real estate investment and real estate lending are two different animals, and expect multifamily lending to continue given the profitability of the business, we believe that a focus on capital conservation at the GSEs will, at a minimum, cause the cost of financing for the multifamily industry to increase over the next 12 months," Bank of America analysts said in a research note.
Since we can't really get on with things until this mess is settled, and it doesn't appear to be working itself out, I am going to ask a few friends to chime in on a couple of basic questions as relates to multifamily:
How will multifamily lending be impacted with a taxpayer bailout of Fannie and Freddie?
What are the short-term and long term ramifications for the borrower?
How are industry fundamentals effected?
What is the target date of the event?
I am going to save myself the research hours and turn it over to the market experts since I do believe that this outcome is going to be much more than I could ever get my arms around. I do like the over-under at Labor Day though.
If you don't feel like posting please feel free to shoot me a note offline.
Tuesday, August 26, 2008
Tuesday, August 12, 2008
Leveraging Brand Value in a Downturn
It is hard to find interesting success stories during the current economic environment but ironically I came across some information from the early 2000 recession years that was retrospective of the early '90 recession years.
The case study illustrates what might have been the beginning of the end for Bear Stearns.
"In the face of a slowing economy, most companies scrutinize their physical assets in order to assess what is critical for their business and what is expendable. However, these same companies also decide to cut investments needed to support their intangible assets, including brands, without even a cursory examination of the ramifications." - Interbrand
Lessons learned from the recession of the early ’90s are illustrative in today’s potentially serious economic slowdown. The following graphs are examples of industries and companies where a well-managed brand alleviated cost and inflation pressures and stresses on earnings in order to maximize share price.
Merrill Lynch vs Bear Stearns - 1990 to 1993 (Merrill ramped up brand investment in the last recession)
We all know the outcome in the case illustrated above. And while there were certainly many reasons for the demise of Bear Stearns it is more important to look at Merrill Lynch and how they leveraged their brand value during troubled times.
This market is such a mixed bag for multifamily housing that I think we will see some interesting power shifts in the lending community, building product manufacturers and other service providers that have huge exposure to the hardest hit areas of the economy. Those in a position to focus on the current opportunities and prevailing trends as we exit the broader economic downturn will reap the rewards for years to come.
It's not necessarily all about advertising but it is about protecting your brand and looking for the strategic opportunities even though the race seems harder than ever.
The case study illustrates what might have been the beginning of the end for Bear Stearns.
"In the face of a slowing economy, most companies scrutinize their physical assets in order to assess what is critical for their business and what is expendable. However, these same companies also decide to cut investments needed to support their intangible assets, including brands, without even a cursory examination of the ramifications." - Interbrand
Lessons learned from the recession of the early ’90s are illustrative in today’s potentially serious economic slowdown. The following graphs are examples of industries and companies where a well-managed brand alleviated cost and inflation pressures and stresses on earnings in order to maximize share price.
Merrill Lynch vs Bear Stearns - 1990 to 1993 (Merrill ramped up brand investment in the last recession)
We all know the outcome in the case illustrated above. And while there were certainly many reasons for the demise of Bear Stearns it is more important to look at Merrill Lynch and how they leveraged their brand value during troubled times.
This market is such a mixed bag for multifamily housing that I think we will see some interesting power shifts in the lending community, building product manufacturers and other service providers that have huge exposure to the hardest hit areas of the economy. Those in a position to focus on the current opportunities and prevailing trends as we exit the broader economic downturn will reap the rewards for years to come.
It's not necessarily all about advertising but it is about protecting your brand and looking for the strategic opportunities even though the race seems harder than ever.
Friday, August 8, 2008
Green Practices Supplement
The Special Supplement to Multifamily Executive has published and is also available on the NMHC Website.
Please view the brief presentation for an overview or click here to view the complete pdf of the Green Practices Supplement.
Please view the brief presentation for an overview or click here to view the complete pdf of the Green Practices Supplement.
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