News
THINK LONG-TERM!
June 25, 2005
| Development titan Richard LeFrak, who knows something about time horizons as head of the eponymous firm his family founded in 1901, set the tone yesterday morning at the Schein Media real estate conference at New World Stages Theatre on East 50th. He recalled how his father used to laugh that their holdings had lasted “through both World Wars, the Great Depression, and even rent control.” |
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| Richard said everyone can survive this, too—provided they “paid attention to their capital stack and know that borrowed money has to be repaid.”We snapped this of him with Mike Katz, CEO of Sterling American Property, who said it’s as though “someone above just pressed the re-set button”: everything has changed from prices to lifestyle. Capitalism, he argued, is based on trust, and there’s no trust in the marketplace at the moment. But therefore, he concluded, this is a “very exciting” time: 70 to 80% of real estate value is made “on the buy.” |
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| W&M Properties chairman Peter Malkin with moderator Jonathan Schein. Peter predicted that “shadow loans” and CMBS debt won’t get paid off, leading to “restructuring, suffering, and opportunity.” He said the biggest thing that has made NYC attractive is security. He credited its start with Mayor Dinkins and said it accelerated because the real estate community was willing to pay extra fees and pioneer business improvement districts. He thinks tourism may become NY’s top industry and although the next 12 and even up to 36 months will be “very difficult” for real estate, “there is great opportunity for those who are equitized.” |
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| PR guru Howard Rubenstein, left, laid some blame for crisis at the hands of media: He said when something happened in Brooklyn “it used to stay in Brooklyn,” but now it’s spread around the world; the urge to be negative has intensified; and bloggers are irresponsible: “Reputation management is an extraordinary challenge.” We also snapped L&L Holding Company co-founder David Levinson, the former CBRE vice chairman, who said he tried to model his business after family run firms like the LeFraks’, Malkins’, and others, because they are long-term thinkers and so you can “always count on their buildings.” |
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| On another panel, Cushman NY research chief Ken McCarthy said the local economy actually hasn’t been as bad as expected: The city’s job loss rate has been lower than the national rate, and even financial jobs have not declined as much as feared. Equinox Partners CEO Tony LoPinto said he thinks “the iceberg is beginning to melt” because in his recruiting business he sees executive postings for not just restructuring jobs, but for expansion. |
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| Terra Holdings chief economist Greg Heym countered that the job market has not been correlated to the strength of the real estate market; he said the latter was stronger after 9/11, and appears to be weaker today. He argued that the bigger correlation is the level of public confidence. Ernst & Young’s Mark Grinis said we have to move through more building sales over time before the “market-clearing price” becomes known. Ken McCarthy responded that everyone knows what that is, but sellers just won’t take it. Let the record show he said that with a smile. |
