More mega-deals are on the horizon.If yOU thought 2004 was the year of the mega-deal, you ain't seen nothing yet. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the panelists at a recent Schulte Roth & Zabel LLP's seminar, 2005 is going to be one of the most active sales years in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of City's history. The caveat, however, is that some of the buyers will eventually end up broke. Most of the panelists dispelled worries that underwriters are becoming too lenient--lately, a serious concern for many in the real estate industry. But they agreed that some of the buyers currently on a shopping spree are making deals that make no sense under current market conditions. "Some years ago, there was only the borrower and the lender and nobody else was involved in the transaction," explained Jeffrey F. Fastov, managing director of Goldman Sachs The Goldman Sachs Group, Inc., or simply Goldman Sachs (NYSE: GS) is one of the world's largest global investment banks. Goldman Sachs was founded in 1869, and is headquartered in the Lower Manhattan area of New York City at 85 Broad Street. . "Today, the market is much more transparent, there are several people [analyzing the deal], so risk associated with aggressive loan underwriting is a lot better." Steven C. Witkoff, principal of the Witkoff Group, agreed that most lenders are being conservative and agree to do risky deals only with those companies that have good credit and a proven track record in the business. Some buyers, however, are so intent on making a purchase, they don't realize that they are throwing money away. "The risk with buying today is where it should be--with equity--and there are some pretty stupid equity deals being done, with mezzanine positions right under them," he said. "I don't think we are in a real estate bubble This article is about the general phenomenon of housing bubbles. For housing bubbles in various countries, see below. A real estate bubble or property bubble (or housing bubble , but I think there is a lot of execution risk [being taken right now]. And that will allow people like us [who are in the practice of buying mezzanine loans A mezzanine loan is a relatively large loan, typically unsecured (ie., not backed by a pledging of assets) or with a deeply subordinated security structure (e.g., third lien on the property but non-recourse vis-a-vis the borrower). ] to make a lot of money down the line." "The competition for [loans] is fierce and people are willing to push the leverage to keep their clients happy," noted Michael P. Higgins, managing director and head of real estate finance and investing banking group with CIBC World Markets CIBC World Markets is the investment banking division of the Canadian Imperial Bank of Commerce. It helps governments, large companies, and other large institutions obtain capital and credit and is a primary dealer in U.S. Treasury securities. . "There is a bullish view on real estate, so they figure they won't get hurt." Higgins believes, how ever, that there is a possibility the market won't perform as well as expected. "We are not in a bubble if interest rates stay the same," he said. "We are in a bubble if they go up." According to Anthony Westreich, president and chief executive officer of Monday Properties, "There has been a lot of discussion about improvements in [market] fundamentals. It's not as active as people think." "There are a lot of market participants chasing low-leverage buys," noted Philip M. Waterman III, executive vice president and chief executive officer of Reckson Associates Realty Corp. "There is a tremendous amount of debt and very little equity being put into these deals." The panelist also expressed worry about such things as possible changes in the city's administration. "One of the risk factors [that no one is addressing] is political risk," noted Joseph B. Rose, partner in the Georgetown Company and former chairman of the New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. Planning Commission Noun 1. planning commission - a commission delegated to propose plans for future activities and developments commission, committee - a special group delegated to consider some matter; "a committee is a group that keeps minutes and loses hours" - Milton Berle . "We've been under three successful Republican administrations on both state and municipal levels. I don't think it's a foregone conclusion foregone conclusion n. 1. An end or a result regarded as inevitable: The victory was a foregone conclusion. See Usage Note at foregone. 2. that policies will remain the same." |
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