bttmline

I'm in the business and yes a whole different world then residential, but if you understand finance and investing you will be fine. The biggest thing to keep in mind is that you really have to understand the local market and that just comes from experience and time. Commercial properties can sit vacant for years on one side of town and the other side be in high demand. Talk to local brokers, developers,owners, and understand all the players. I have a list of books for you to start with, but one of the better ones that I read and still think about is Professional Real Estate Development, Second Edition: The ULI Guide to Business. I'm happy to answer any questions.

It seems more and more apparent every day that israel is going to bomb Iranian nuclear sites. We already are seeing the spike in oil prices, but not seeing a lot of media coverage in US. I guess I'm not feeling a lot of market concern about this?

Here is the link for the reinsurance entity and holding company structure. Look at page7. http://www.searsholdings.com/invest/docs/Sears_Re_February_2012.pdf I'm trying to walk through this, but basically about $3 billion sits in the reinsurance co secured by notes to various assets. Does anyone know how debt has been issued by sears? Ie. has it been guaranteed by the individual operating entities or guaranteed at sears Holdings?

You have virtually no chance of talking directly with a REO person at bank unless it is a real small bank who doesn't really even have a workout group. I deal with the workout groups of many banks and they barely have time to call me back and they hired me. #1. They hear a statement like yours no less then a 1000 times a month #2 they have zero free time and completely overworked #3- you most likely will not get a better deal as the broker will try push through any valid deal. As suggested, you would be much better off talking/befriending a broker who works on many of these in your area. Also, just because it's REO it's not necessarily a good deal. A short sale or motivated seller could be a much better deal in many situations.

Yields are getting very interesting and trying to catch up on my research. Is anyone here taking positions and through which vehicle i.e Bond fund, etfs, or individual purchases? Listing of current yields on blackrock closed end funds http://www2.blackrock.com/US/individual-investors/performance-pricing/closed-end-funds I'd prefer to go with a respected manager, but just not versed in the bond world like equities. Any muni-bond manager with a long track record that someone could suggest to take a look at?

I agree with Myth. The REIT is simply a yield chase play by institutions. Not many options if you need current income. I wouldn't buy most of them now, but they are priced a little better now than they were a couple years ago in the peak when comparing to spreads over 10 yr Treas. BeerBaron: Valuation on REITs is all about Price to FFO (i.e Yield) or in private market Cap rates. Cap rates in private market have gone nuts over the last year and are back to 2006-07 levels for high quality assets. Class A properties in New York and Washington are trading in 5 Cap Range (Basically 5% unleveraged return or 20x earnings). So, basically the arbitrage between private and public isn't too much in most asset classes. The problem with book value on Reits is that its based on historical cost (In US). If they mostly bought in 80-90's then book value should be 2-3x cost. If they bought in 2004-2007 most likely should be < 1x book. Other reasons institutional buyers are back for REIT's: 1. Many have de-levered and extended maturities. Avg US Reit is less than 50% LTV where private market real estate is closer to 80% LTV. 2. Allocating to REIT's vs Private Equity Real Estate. No 2/20 fees and liquid. 2. Occupancy levels are down from say 90-95 % to 80-85% range. Some upside in releasing space. Of coarse there is downside if rents keep going down. 3. Many view as inflation hedge, especially in the apartment sector

Its funny, I just had a conversation with a mortgage broker the other day how its crazy that the interest rate isn't really much different on LTV. I had asked him to quote me on a loan for a primary residence with a 40% ltv and a secondary residence with 80% LTV. He told it didn't really matter LTV and rate ended up being almost identical.

Does anyone know how to get a list of Berkshire insured municipal bonds?

You can take a look at Wilmington Trust (WL) as the bad bank model. They are being acquired by M&T at large discount to book, based on the amount of bad loans. WT did everything wrong on the banking side. Over 20% of loan book were in construction and development loans, concentrated to a small geographic area, and had large single borrower concentrations. First thing I look at now in the small banks is what years did they grow their loan book, how large is their construction and development book, and do they have retail deposits to match loans.

http://etfdb.com/2010/powershares-deutsche-bank-team-up-on-3x-leveraged-bond-etfs/ Symbol: SBND I've been looking into this new product recently. I had owned the inverse TBT before, but you are subject to tracking error with daily ETF product. This is an exchange traded note which supposedly doesn't have the same tracking error. Maybe someone here has some experience here with them that they can share. I've also been looking at potentially shorting the JNK . This is the high yield index that has had a huge run up over the last year. Duration of this one is shorter at around 6-7 yrs though.

http://www.longleafpartners.com/pdfs/10_q3.pdf Trimming some positions that ran up this year, but still finding opportunities. They think they are about 60 P/V across funds.

Tariq, take a look at (BNCL) Beneficial Bank and tell me what you think. They did their 1st step in 2007 and have been sitting on excess capital since. They took a large write down for q3 but management is pretty conservative and think they were just being proactive. Stock took a huge hit when they announced the write downs a couple weeks ago and I added to my position. Earnings have been weak because of excess capital, but there should be acquisition opportunities over the next couple of years. There are many small banks in the Philadelphia region that won't be able to make it much longer.

do yourself a favor and print the transcripts from seekingalpha.com. Prob takes 5-10 minutes tops to read vs 45 minutes on a call. Over the last year or two I read a lot of them as it qives great insight into metrics on specific industries as mentioned. I agree with you guys that I really like focusing on the q&a.

I bought a small position earlier this year, but agree its a lot of work to understand and still won't have definite valuation. Basically, you have to look at the structures of their deals, management, etc, and feel comfortable with the general theme and terms. Its a similar to the trust involved investing in Luk or BRK. Personally, I like how they are run, the asset classes, and the ability to increase returns with asset management and incentive fees. It seems to me that every deal across asset classes they are targeting mid teen returns and capable of getting it. Mind you that when you are using partners money who's return expectations are sub 10% Brookfield with be left with large incentive distributions. I guess I'm a little more comfortable with the debt level on the real estate because for the most part lower leverage deals <60% and mostly on individual non-recourse basis. They made some mistakes in Brookfield Properties with the Trizec deal, but seems like they will end up okay on that now. Certainly, interest rate increases will have an affect, but depends on the debt terms. Many of the deals are done with 10 yr term.

I haven't had a chance to dig too much into the real estate side yet, but I can tell you as someone in the commercial real estate industry that it still has value. I have come across 2-3 leases in the last couple of months at $2-3 SF where market is closer to $10 SF with options with minimal or no increases for 50 yrs. Some of the big box tenants such as Kohls, Costo, other value retailers, etc are still doing deals if they are cheap. There will be a new retailer that will able to get a start based on some of these below market deals. Home Depot was able to really get started in the last recession due to a couple large retail bankruptcies. Also, as stated prior its not like they are going to have to market their whole portfolio today at distressed prices. They will have time to slowly wind down unprofitable stores.