thepupil

luxury building on union square south going for $884K / unit. without knowledge of the value of the retail, difficult to figure out an "apartment only" price. an NYC bear say "you can't count this one, because it has high value retail near/on union square. that's not a real per unit price"...to which i'd respond" so you're saying well-located NYC retail has a lot of value? this is a pretty expensive building: https://streeteasy.com/building/1-union-square-south-new_york#tab_building_detail=1 a penthouse 1BR is $6K and a studio is $3.5K. bonus points to who knows who owns the whole foods next door on Union Square, Whole Foods first location in NYC. i'll give you a hint. it rhymes with Tornado.

this is funny, when people ask me for stock tips (who don't know much about investing), I tell them EQC (the most boring thing I own) and then whatever the most juicy option thing I own at the time is (CDR right now). I tell them, you'll probably put a small amount of money in ____ (super levered thing) and lose it all but it's a good gamble. No one ever asks more questions about EQC after a brief description. EDIT: I also tell them to index all that said, if i ever manager others' money in a professional fashion, it will be anchored by my and my immediate family and some friends...so I don't quite agree with the "don't mix family/friends" stuff.

not to mention the pricing from a consumer standpoint is starting to get super attractive in my view: https://streeteasy.com/building/360-east-57-street-new_york/10b this apartment (well one a few floors up or down) was $5100 when i lived there in the early 2010's. it's now $4200. rent down 20% from almost 10 years ago, while salaries/all-in comp for elite fields is probably up 20% (or more in some instances, I'm honestly not as in tune with entry level comp for banking/consulting/tech) the living room can be a 3rd bedroom, that's $1,400 / month average for 3 dudes to live in manhattan making like mid $100's 1st year out of college (finance/tech/whatever), or $2000/month for recently graduated big law types making $250K (you get your own bathroom and a full living room for having to deal with law school). i'm sure this apartment is not the cheapest/most expensive, i just picked this one because i have a great sense of comparability and know what it's like to actually live there (it's nice, doorman building, perfectly acceptable). it's not a hip spot, the neighborhood's kind of boring, but you're a walk away from the offices in midtown and a wasted cab ride away from lots of night life. people make a lot more today than in the early 2010's, the disposable income of the yuppie crowd. rents down = massive increase in disposable income for playing and getting ahead in the greatest city in the world and that applies at all levels. think how cheap its getting to share apartments in outer boroughs. sure that's bad for near term NOI, but it also creates an attractive pull. you can say "well ya but you could get a house or your own apartment for that in XXX", sure, but it's not in NYC. rents are skyrocketing in the places people are leaving to. like in south Florida for example. the NYC premium collapsing should help buffer the "exodus" EDIT: for context, the 2BR I shared in the south immediately after my time in NYC is now $2000 up from $1500. So the spread went from $3,700/month to $2,200/month.

How much NYC office do you still own? This is what makes a market. low teens % of portfolio and dropping.

I've personally sold all my NYC focused REITs and purchased a boutique hotel in Belgrade, as it's the future. https://nypost.com/2020/11/17/serbia-is-a-new-unlikely-oasis-for-nyc-residents-fleeing-the-city/

I don’t think we’ll have a depression, probably just an extinction level event.

my newsletter already costs thousands in real estate related securities losses.

I think this has more to do with the degree to which corporate credit has tightened and asymmetry than anything. CDX IG is at 50 bps. Meaning one can pay 50 bps / year for 5 year to buy default insurance on a basket of 125 investment grade credits. Pre-covid this number was 40 bps. The risk in investment grade credit has increased by more than 10 bps. The lowest they've been in 10 years is 45 bps. During the march sell-off this blew out to 160 bp. Ackman's hedges were on US and European investment grade credit primarily, on $70 billion of notional. this time around it's "less than 1/3" the size. Let's say it's $20 billion. So he's probably paying about $100mm / year to get short $20 billion of investment grade credit. If spreads widened to 100 (for context they widened to 93 in december 2018 on general fears of rising rates/end of QE), he'd make ~2.5 points on the notional or $500mm. This is in the context of a ~$11 billion of AUM. He's fighting the fed, but even if he's wrong he has permanent capital and the cost of carry is not huge at his current size. As a PSH shareholder, I approve. I cannot put this on as I don't have ISDA's with banks lol. I would short IG at 50 bps if i could. I also think this is a good hedge to rising interest rates w/o the ZIRP/NIRP tail risk and with far better/empirically observed negative correlation to equities than shorting treasuries/rates. Corporate credit quality will deteriorate if the all-in cost of financing increases (see late 2018 widening). he may even be shorting HY at 330. HY is at an all time low absolute yield (in the low 4% range) and very low absolute spreads given the default environment. I continue to think investing in Ackman at a 30% discount is very attractive.

33% in urban RE to 30%. 2020 would have been better for me if I’d been more of a wuss and managed risk/concentration better. That’s why the name isn’t theMaster. Gregmal, I sold all my JBGS today....then bought it all again...tax gain harvest, same with berkshire.

I think that a no vaccine / no good therapeutics scenario was relatively low probability and that probability is no even lower. it's a fundamental positive for names dependent on life mean reversion vs a negative for current life extrapolation. the long term secular trends brought about by covid likely remain, but perhaps for less long or to a lesser degree. perhaps not. I think to have owned anything involving human interaction (in my case urban apts/office) you kind of had to assume that there'd be a vaccine at some point (whether people are getting their shots in 6m or 12m or 24m was less important, at least to me). I don't think much has changed and would hypothesize the degree of these moves has more to do with positioning than fundamentals, but that's speculative. i trimmed a little today in some of the more dramatic moves in urban real estate.

~7% annualized, not bad at all.

Of course the “real” reason is narrative follows price and no one knows why things are happening

No blue wave = lower probability of forceful regulation of big tech, less likelihood of big increases in corporate taxes, less likelihood of massive stimulus and growth which equals lower rates which is good for tech stocks which are a long duration asset class. Also Prop 22 in California shows that in one of the US’s largest most progressive/liberal states people still want cheap labor for their app based gig economy but that’s minor.

0-80% LTV w/ Wells Fargo @ 3.125% 30 yr amort, 10/1 ARM (fixed for first 10 years, can not go up by more than 500 bps in total or 200 bps / year) 80-97% LTV w/ Signature Federal Credit Union @ 5.25% 15 year amortization, 5 year balloon, all due in 5 years. The idea was that the balloon would not be a large amount of money for me in 5 years, but I didn’t want the full 20% down payment in 1 asset. i found signature federal credit union on a biggerpockets discussion as the most lenient highest LTV 2nd mortgage lender. EDIT: I had to buy with 20% down (can’t have a 2nd lien in the DC bidding wars, sellers will take other offers, messes with the closing to be wrangling 2 lenders), then do the 97% LTV cash out a few months later I must admit, I've since de-levered, reducing ROE, it's more like 93% at cost, 88% LTV at value now

bought my house at a 3 cap w/ 97% leverage in 2019. best real estate investment i've made thus far. get at me flyover scum with your low taxes, fiscal health, and reasonable cost of living! gross!

https://www.privateeyecapital.com/essex-property-trust-3q-results-pretty-pretty-good/

Where do we draw the fairness threshold? If an immigrant family toils to build a dry cleaning business/hotel/apartment worth $2 million, is it fair for that to be taxed at 50%+ at death? If my grandpa sat on Gillette stock for 70 years and has a 100+ bags of P&G that he wants to put in an educational trust for my future kids,what tax rate should apply at death? (This is a real life example lol) Should the rate be different because the immigrant worked harder and had a harder life than my grandpa? (This is objectively true) Or because the dry cleaning business is a “real Family business” whereas clipping divvies from tide pods and 10 bladed razors is not? What amount of dry cleaner/P&G is it fair to inherit? $500K, $1mm, $2mm? $10mm? Does it change if the money is to be spent on a Ferrari vs education? I think we need higher rates from a fiscal standpoint, but think that death duties at rates which amount to seizure are antithetical to the bedrock of capitalism and freedom: property rights.

i feel like i am really in the running for "most COBF dollars destroyed with ideas in 2020" award.

$337K / unit, 5.8% cap on new fundamentals, bought a little more but by no means a material position yet. waiting for and expect more pain, many years of pain.

EQR results look pretty bad, as expected.

one thing i would add is that there's a perception that paying up for private school leads to better college outcomes. this was absolutely the case 50 years ago (there's a fun story about harvard having an admissions folder for exeter that was bigger than the midwest) and the case 15 years ago, but I would point out that being "privileged" is actually an admissions ding for many of the top schools and it's EXTREMELY competitive when coming from a top zip code public or private. don't get me wrong, it's still an advantage, but you're not entitled to an ivy league admission if you do well at a top private school, particularly if you are asian and to a lesser degree white. this trend will only continue as some schools are even (gasp!) removing preference for legacies.

KJP, as a NW DC/MD resident, I am in your boat as well. the private school decision starts in the $30K/year for pre-K / kindergarden and gets inthe the mid $40's for high school. when you take into account tax rates, you need to make $100K-$150K / year just to fund school for 2 kids. but people get used to paying $2.5K -$3K / month for daycare and just continue it all the way through HS. that said, i went to a mediocre (academically) protestant school for K-8th in an affluent suburb in south florida. it currently costs $7K - $11K / year (k-8th). i'm sure there are plenty of these type of schools around the country, where they may be better than the public option, but aren't the same as sending your kids to germantown friends (or Sidwell friends in my neck of the woods) or whatever....what's up with the quakers and their super premium schooling! it was a great experience and worked out for me. i then went to a super rigorous private high school that's now ~$35K/year (it was $17K when i graduated 13 years ago). It was also a spectacular experience and offered a better educational experience than my top 10 college (which is more of an awesome network/brand, more so than an education)...which now cost $58K/year... my wife was all public until college and is doing just fine (PhD in competitive field). we don't have kids yet. if we are still here, we'll go public, because we make a decent income, but unsure if we'll be able to afford private school in this area; even if we can afford it, it's just hard to see spending $1mm or so after tax before college (2 kids 15*35), particularly after paying 9% in state and local taxes, and $10K+ in property taxes. the public schools are good. both of our neighbors are doctors, sent their kids to public all the way and they're doing well. i had a lot of friends in college who came out of strong public schools in this area. that's my douche-y post for the day.

this may have been said, but i like the politics category because i can mute it, and there's a clear place to discuss politics. Because it exists, political discussion is almost invisible to me, with the corona thread a notable exception. I assume that in its absence political discussions would creep into other categories/threads. this very thread is actually the most i've seen of it (since it's in "general discussion"). but if it's deleted, i think that's okay too, since it formalizes that "this is not a politics board"

https://www.costar.com/article/1866671625/apartment-tower-sale-smashes-atlanta-price-record KKR and a partner paying $180 million for Hanover Midtown in Atlanta. This appears to be quite a sexy building, 350 units. https://www.hanovermidtown.com/hanover-midtown-atlanta-ga/location https://www.apartments.com/hanover-midtown-atlanta-ga/pfsrw7t/ another article says the building also has some retail and 2 floors of office leased to WeWork, so I'm not sure if the price includes or excludes that (I don't have acess t the costar article). If I chop off $0-$40mm for that, this is $400K - $515K / unit. If the retail and office is more then it's less per unit. Nevertheless a strong print for multifamily. Earlier upthread KKR paid $800K+ unit for brooklyn multifamily.