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Saturday, November 14, 2009

Zell on CRE: Too Soon for Grave Dancing

by Calculated Risk on 11/14/2009 04:52:00 PM

From Barron's: Sam Zell: Too Soon for Dancing

Sam Zell ... said ... that the time isn't ripe because owners of office, retail and warehouse properties and their lenders are living in a dream world, believing that property prices will recover and vacancies will drop. ...

"Everybody is waiting for the Grave Dancer to come in, but at this point property owners won't tango," he told a gathering of prominent investors in downtown Chicago .

When Zell does start buying, he said, hotels are where he plans to play first ...
Zell has bought and sold CRE at the right time before.

However last year at the Milken Conference in Los Angeles, Zell thought CRE would be fine - from my notes:
Sam Zell started by saying we need to separate commercial from residential. Commercial will be fine in his view (not my view). ... Zell isn't talking about new construction (CRE), rather he is talking about prices for existing CRE. He feels there is too much global demand ("liquidity") for prices to fall too far - especially for Class-A buildings.
Watch what he does, not what he says!