Landmark Links November 5th – Anchored

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Must Read: We often hear statistics about home supply expressed in months of inventory.  However, that statistic looks a whole lot worse – and perhaps a lot more telling when taking population into account.  Adjusted for population, the inventory of homes for sale is now near the lowest level in 37 years of record-keeping, according to housing-data firm CoreLogic Inc.  This seems to be a self perpetuating problem since it leads to higher prices, which in turn makes it more difficult for younger, traditionally upwardly-mobile people to move.  In other words, don’t expect a the trend to change anytime soon.

Economy

Subsidized: Nearly 40% of 2019 American farm income will come from federal aid and insurance thanks to the impact from tariffs.  In addition, farm bankruptcy filings are up more 24% from a year earlier, at their highest level since 2011.

It’s About Time: The US Treasury is exploring a issuing a 50-year bond for the first time.

Wait and See: The Federal Reserve cut rates again last week but indicated that, short of a substantial change in economic outlook, they are done cutting (or hiking, for that matter) for the foreseeable future.

Graying: China’s median age will overtake America’s in 2020, putting tremendous pressure on a populace that could grow old before it gets rich.

Commercial

In the Dark: Supermarket chains are building so-called dark stores that look like grocery stores but are closed to customers and only service delivery and pick-up business.  In addition, some grocers are re-configuring the back of their stores into micro-fulfillment centers that are dedicated to pick up and delivery.

Blow-Back: A growing boom in self storage in recent years is running up against resistance from local governments who view the market as over saturated with units that take up a substantial amount of land and generate limited new employment.

Enabler: Adam Neumann was always batshit crazy but it was SoftBank and their virtually unlimited capital that ultimately fueled the WeWork bonfire.

Residential

Direct Beneficiary: The only real winner so far in the China trade war has been the housing industry which has benefited immensely from dropping mortgage rates.  However, if/when a new trade deal is reached, rates are likely to spike again, likely extinguishing the rally.

Up In Smoke: California is plagued by two major issues: wildfires and a lack of affordable housing. Each problem exacerbates the other.

Pushing on a String: The housing market needs more than just low mortgage rates if volume is ever truly going to rebound.

Profiles

Time for a Reboot? The Nationals impressive run to win their first World Series after losing superstar Bryce Harper to the Phillies may mean that its time to recast the Ewing Theory as the Harper Theory.

Can’t Turn the Corner: Restaurants have based much of their recent growth on consumer deliveries.  However, a recent catastrophic quarter from market leader GrubHub cast doubt on whether the food delivery service will ever be able to turn a profit and is making the sector look like another gig-economy dead end.

Ringing in My Head: The song ‘Baby Shark’ has made millions for the family behind the infectious tune.  I’m conflicted about this.  On one hand I respect the hustle.  On the other, my kids are hooked and this tune has essentially taken over my inner monologue.

Chart of the Day

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Source: CoreLogic

WTF

Take a Bite Out of Crime: A college freshman at the University of Northern Colorado (allegedly) took acid and tried to bite a police officer’s groin when he was arrested for “acting aggressively.” (h/t Dave Clarke)

Holy Shit: A San Diego police officer was sucker punched by a Halloween reveler dressed as Jesus who apparently got into the holy water.

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

Visit us at Landmarkcapitaladvisors.com

Landmark Links November 5th – Anchored

Landmark Links November 1st – Supermarket Sweep

Supermarket Sweep

Must Read:  This quote from the Wall Street Journal about how crazy shopping Whole Foods has become since getting purchased by Amazon perfectly encapsulates the bull case for cold storage buildings:

Whole Foods Market, once a paragon of leisurely high-end shopping, has become a battleground where well-heeled shoppers fight for elbow room and choice salmon cuts with harried delivery couriers.

Economy

Hooked: Forget credit card debt, American consumers are hooked on installment loans – many of which are pushed by sketchy payday outfits that got into the space when regulators started cracking down on their primary line of business.

One Trick Pony: Q3 GDP growth of 1.9% annualized pretty much came from consumers and nothing else.

Commercial

All In: Blackstone now owns 800 million square feet of industrial warehouse space as a massive online shopping play, more than half of which has been purchased in the past year.

Proceed with Caution: Data from both Real Capital Analytics and the CoStar Group shows sales volumes declining in most of the core CRE sectors (excluding only industrial and hospitality) as investors grapple with high prices.

Risky Business: Softbank is using cash from its own balance sheet (a publicly traded company) to bail out its WeWork investment made via Vision Fund (a venture where most of the equity comes from Saudia Arabia’s and Abu Dhabi’s sovereign wealth funds).  Of course, this is a massive conflict of interest but that’s just how SoftBank (and WeWork) see to roll.

Residential

Changing Landscape: iBuyers are changing the real estate landscape for rental investors in a way that will have far-reaching consequences for years to come.

Tailwind: Falling interest rates have ignited the mortgage market back to pre-crisis levels as lenders extended $700 billion of home loans in the 3rd quarter.

Fixer Upper: With people staying in their homes longer, has remodeling become a better barometer for the direction of consumer spending than home building?

Profiles

Hovering: Parents are now using tracking apps to watch their kids at college because parents are crazy AF.  I can’t wait until they start demanding to talk to their kids’ bosses once they graduate college as well.

Denial: Hedge funds keep losing assets but continue to hire fundraisers in an attempt to raise more.

Recurring Revenue: Lyft is making a bid for customer loyalty with a monthly-fee-based subscription serviceSee Also: Uber is making a deeper push into financial services by making digital wallets and upgraded credit/debit cards available to drivers.

Chart of the Day

Homeowners’ mortgage debt service ratio is the lowest in decades.  That’s not the case for the US consumer debt service ratio though.

Source: BofA Merrill Lynch Global Research

WTF

There’s Hope for All of Us: In the feel good story of the day, a longtime vegetarian living in Australia succumbed to her craving for a hamburger while pregnant with her first child, got hooked and has now started a new career as a butcher.

Realistic  Fear: A South Carolina man (allegedly) stabbed a woman out of fear that she would feed him to zombies because drugs.

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

Visit us at Landmarkcapitaladvisors.com

Landmark Links November 1st – Supermarket Sweep

Landmark Links October 29th – Fallout

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Must Read: WeWork got its bailout but there are investors who may have substantial exposure to the flailing co-working company without knowing it: buyers of CMBS bonds that have a substantial number of WeWork buildings as collateral.  This has the makings of a brewing shitstorm – from Fortune (emphasis mine):

During a review of Securities and Exchange Commission filings, Fortune identified at least nine CMBSs issued through banks such as Credit Suisse, Bank of America, and JPMorgan Chase in which at least one of the pooled mortgages was on a building where WeWork leased between 25% and 100% of the available space. Should WeWork cease operations in those buildings, that could be significant income to replace. And the lease income pays the mortgages that fund payments to bondholders.

See Also: Every word of this Wall Street Journal feature article about the collapse of WeWork is more absurd than the last:

As he was preparing for an IPO that would make him a billionaire many times over, Mr. Neumann was surfing in the Maldives when executives in New York called to go over the all-important document that would be released to investors. Reluctant to cut his trip short, Mr. Neumann summoned a WeWork underling to the Maldives for an in-person briefing, according to people familiar with the episode.
Back in New York, Mr. Neumann spent much of the summer working on the document, known as an S-1, in the Hamptons, regularly helicoptering employees out from the city to help. His wife, Rebekah, WeWork’s chief brand officer, insisted it be printed on recycled paper, then rejected early printings as low-quality, according to people familiar with the matter. The process was set back by days and the printing shop originally hired for the job refused to work with the company. WeWork gave part of the job to a small New York paper company that rents space in one of its offices.

It’s a good thing that the Neumanns were banning meat and using recycled paper for the S-1 to save the environment while ferrying around employees on private jets and helicopters to meet so as not to inconvenience them.

Last but not least, The Onion has gotten into the WeWork piling-on party with an incredible headline: WeWork HR Invites Employees To Sign Goodbye Checks For Departing CEO

Economy

Beneath the Surface: The yield curve may be back to normal but the economy most definitely is notSee Also: An un-inverted yield curve is not a blanket all-clear for the economy.

Rorschach Test: The post-crisis economy has reached the point in the business cycle where the evidence for both continued expansion and downturn are fairly balanced meaning that one can find whatever it is in the data that they are predisposed to see.

Dark Clouds: Many American companies gouged on cheap credit via CLOs or Collateralized Loan Obligations during this expansion.  However, the search for yield has led to CLO pools with riskier loans and the whole thing could come crashing down when the cycle turns and defaults explode, cutting off cfunding for many companies.

Commercial

Slowdown on the Horizon? Industrial users are expected to absorb about half as much space quarterly over the next two years as they did in 2018 and 2019, when quarterly absorption averaged 60 million sq. ft., according to the semi-annual Industrial Space Demand Forecast from the National Association of Industrial and Office Properties (NAIOP).  Will this decrease in demand be enough to bring equilibrium to a market where it has exceeded supply for years?

Barrier to Entry: Finding and leasing warehouses close enough to population centers to pull off one-day delivery has proven more expensive than Amazon projected, leading to much larger-than-expected investment on warehouses and corporate profits dropping 26%.  See Also: E-commerce’s addiction to speed is hitting a roadblock in that much of the best-located existing product is quite outdated and ill-suited for modern technology.  However, prices are so high that redevelopment is not often economically viable.

Residential

Blurred Lines: Gentrification and the housing crisis are not the same issue, even though they are often confused as such.

Falling Behind: Some large landlords are missing payments on their loans against Manhattan properties that were due to be renovated thanks to a new rent control law.

Profiles

Send Help: As California burns and millions go without power, Governor Gavin Newsom is asking Warren Buffett’s Berkshire Hathaway to make a takeover bid for bankrupt utility giant PG&E Corp.  Personally, I would have asked SoftBank instead as they appear to have a thing for throwing billions into raging fires.  See Also: Power lines are starting some of the fires but it would take 1,000 years to put them all underground at the current rate, at a cost of $3MM a mile.

Different Approaches: Walmart is pushing to put more robots in its retail stores.  Target is not.

Doo Doo Doo Doo Doo Doo: How the toddler hit ‘Baby Shark’ became the Washington Nationals’ theme song in their Wold Series run.

Charts of the Day

Median new home sales price is falling.

The good news is that it’s not happening because the market is crashing but rather because there has been a massive drop in sales of $400-$500k homes and an uptick in starter homes.

Source: The Daily Shot

WTF

That’ll Team Him: A mother was arrested for dislocating her son’s jaw after he refused to stop playing Fortnite and take a shower because Florida.

Daisy Chain: Hitman hires hitman who hires hitman who hires hitman who hires hitman who tells police because China.

This Has Gone Too Far: A woman was killed by debris that resulted from an explosion in a gender reveal gone wrong because millennials.

But Did It Work? An Indian man was arrested for eating several sloth bear penises in a bid to increase his libido.  His wife was unavailable for comment.

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

Visit us at Landmarkcapitaladvisors.com

Landmark Links October 29th – Fallout

Landmark Links October 25th – WeWorked SoftBank

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Feature: So, I woke up this morning determined to give something other than WeWork top billing on this blog.  However, the ongoing saga gets more absurd by the day and is frankly more interesting than anything going on in the business world right now so WeWork takes the top spot yet again.

Just a few short weeks ago, we were told that WeWork wouldn’t run out of cash until sometime around the end of the first quarter of 2020.  LOL, just kidding – they were actually going to run out of cash by the end of THIS WEEK.  In fact, things were so dire that the company had to put off laying off employees because they couldn’t afford to pay severances.  This is even more stunning when you consider that the company has raised nearly $11 billion during its relatively short lifespan, making it easily one of the most prolific cash burners of all time.  As you could imagine, that upped the ante quite a bit to get a rescue package done and SoftBank eventually beat out JP Morgan with the winning bid.

What’s particularly interesting is that Adam Neumann still held all of the cards despite stepping down as CEO earlier this month, due to his controlling shares with 20-1 voting power.  As a result, Neumann walked away with a kings ransom and SoftBank got what some might consider a “bad deal” (those quotation marks are the best I could come up with for a sarcasm font).  So what does SoftBank’s WeWork bailout look like?  I’ll give you a moment to position yourself closer to a toilet, should this make you nauseous.  Ok, ready?

This is from the Wall Street Journal (emphasis mine):

WeWork, in danger of running out of cash in the coming weeks, chose a rescue offer from SoftBank over a competing proposal from JPMorgan Chase & Co., according to people familiar with the matter. It had asked both parties to submit proposals by a deadline yesterday.

The deal is expected to value the company at about $8 billion, a far cry from what it was aiming for in an initial public offering earlier this year and even less than the $47 billion at which a January investment from SoftBank pegged its worth.

Mr. Neumann, who was forced out as chief executive after pushback from prospective investors scuttled the IPO, has the right to sell $970 million of shares, or roughly one-third of his stake, in a so-called tender offer in which SoftBank will offer to buy up to $3 billion in WeWork stock from employees and investors.

The Japanese conglomerate, which already owns about a third of the company, will also extend Mr. Neumann credit to help him repay a $500 million loan facility led by JPMorgan, the people said. It will also pay him a $185 million consulting fee. …

As part of the deal, which We was expected to announce as soon as Tuesday, SoftBank would move up a $1.5 billion investment it had been scheduled to make next year and extend the company a $5 billion loan

If I read this correctly, SoftBank is investing $9.5 billion into WeWork which brings their total to around $18.5 billion.  This makes perfect sense if you are into lighting money on fire.  The part that I find funniest is that they are doing this even though they only value the company at $8 billion (SPOILER ALERT: it isn’t worth anything close to that).  In addition, $3 billion dollars goes to bailing out other equity holders – roughly 1/3 of which will go to Neumann – which seems rather absurd.  The $185MM consulting fee is vomit inducing but I’m guessing that was the only way to get Neumann to give up the controlling shares necessary to make the deal work.  Either way, the buyout seems like a massive waste of cash when equity holders like Neumann could have probably just been diluted rather than limiting the amount going to the company to “only $6 billion.”  Also, as a condition to the deal, the company name is being changed to the headline of this blog post.

As you can imagine, employees, many of whom are about to get laid off now that WeWork has the money to pay severances are none too happy that Neumann is walking away from the dumpster fire that he lit and then poured gasoline on (with the help of SoftBank) a billionaire and I can’t blame them one bit.  SoftBank probably isn’t thrilled but they were the chief enabler in this mess and as such are ultimately getting their just desserts.  Neumann walks away incredibly wealthy despite being one of the most disastrous CEOs in corporate history.  As for the company, who knows?  I have a sneaking suspicion that this saga is far from over and the way it spends money, the $6 billion should probably last just long enough for Christmas layoffs.  So much for elevating the world’s consciousness.

See Also: There is already a WeWork Netflix documentary in the works and frankly, I can’t wait.

Economy

This is Encouraging: Consultancy McKinsey & Co. recently released a survey that found that half of the world’s banks are too weak to survive a downturn due to their returns on equity not keeping pace with costs in a low-rate environment coupled with competition from fintech startups.

Increasingly Uncertain: This excerpt from Oaktree’s Howard Marks’ latest letter perfectly encapsulates how negative interest rates should be viewed:

“At minimum, negative rates mean there’s increased uncertainty, and thus we have to proceed with more trepidation. Whatever we knew in the past about how things worked, I think we know less when rates are negative.”

Doubling Down: China has doubled its planned infrastructure spending in the coming years in order to stave off an economic slowdown amid the trade war.

Commercial

Slow Start: Opportunity Zone funds have raised only 15% of their target on average.  A big part of this may be the difficult structure of the capital:

Other challenges are structural. Private-equity funds typically solicit commitments from investors, find deals and then call for money that has been pledged for two years. With opportunity zones, “the money that comes in has to be capital gains,” said Thomas West, a former Treasury official and now a principal at KPMG LLP. “It is very hard for investors to commit to having capital gains on hand over that time period.”

Some managers are already tweaking their strategies. Bridge Investment Group LLC initially aimed to raise a $1 billion blind pool opportunity-zone fund, in which property investments wouldn’t be identified until after fundraising. In June, Bridge switched to a series of smaller funds with investments that have already been identified.

Upping the Ante: Institutions are continuing to raise their real estate allocations in 2019 as the search for yield continues, unabated.

Residential

Imbalance: Affordable housing supply is falling massively short of demand, resulting in a bi-partisan bill to increase the amount of Low Income Housing Tax Credits (LIHTCs) available to developers by 50 percent over a five-year period.

See Ya: There’s an exodus out of California, but its not coming from retirees – who typically have low property taxes thanks to Prop 13 – as typically believed.  Instead, its middle class Californians that are streaming out of the state and moving to more affordable markets like Texas, Nevada, Arizona and Boise, Idaho.

Buyers Wanted: Luxury homes for sale in the Hamptons are piling up at a record pace as inventory continues to swell to record levels.

Profiles

House of Mirrors: Brands pay online influencers billions to pitch products.  Yet there is still no way to measure sales or verify how many people even see the adds.

20/20 Hindsight: Today we take it for granted as an obvious outcome that Netflix would eventually put Blockbuster out of business.  However, this outcome was far from certain when the battle between the two was being waged.  See Also: Netflix to sell another $2 billion of junk bonds as it braces for an onslaught of competition.  And: Why streaming video will soon look like the bad old days of TV.

Who Could Have Seen This Coming? California’s Assembly Bill 5, which was meant to crack down on companies like Uber and Lyft that use contractors rather than employees is going to have dire consequences for freelance journalists and is setting off an industry shit storm.  Of course, it’s being driven by union interests.

Chart of the Day

This is a huge problem, especially in California.

 

Source: Bloomberg

WTF

Get a Room: A man had sex with stuffed animals at Target – including Olaf from the animated Disney movie Frozen – because Florida.

Challenge Accepted: America’s pile of uneaten bacon is the biggest in 48 years.

Oh Really? A group of sex offenders is suing a county sheriff over signs he put up in their yards last Halloween, warning children to stay away. They claim the notices in their yards violated their constitutional rights.  I say he’s a hero.

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

Visit us at Landmarkcapitaladvisors.com

Landmark Links October 25th – WeWorked SoftBank

Landmark Links October 22nd – Circling the Drain

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Must Read: WeWork is getting desperate and without billions of new dollars, will run out of money by as early as next month.  It looks as though the company prefers a $5 billion debt package with an interest rate of over 15% from JP Morgan over an equity package that would effectively take the company over from SoftBank.  It’s becoming difficult to see how this does not result in bankruptcy. and the company is already trying to renegotiate its leases (called this a year ago). It looks like a whole lot of commercial landlords are either going to get crammed down or end up as unintentional co-working operators.  In addition, WeWork is now facing an executive exodus as the hope of cashing in on an IPO is now gone and top talent is fleeing for greener pastures.

Last minute update: Softbank is poised to take control of WeWork (despite reports that the JP Morgan debt option was preferred) by providing an additional $5 billion in addition to the nearly $11 billion that they they have already invested.  The deal will value WeWork at between $7.5MM and $8MM.  I’m no math whiz but those numbers don’t exactly look good.

Side note: Wall Street was ready to sell you this steaming pile of trash for $60 billion about 2 months ago had the IPO not been derailed by skeptical investors.  This downward spiral is accelerating and nowhere near over.

Economy

Slowing to a Crawl: China’s economy grew at 6% in the 3rd quarter, its slowest pace in about 30 years.  Chinese economic reports are roughly as reliable as tarot card reading but there is still no way to pain this one as a positive for the global economy.

Not Done Yet: Recent testimony suggests that the Federal Reserve will cut interest rates again when they meet later this month.  After that, things become a bit more uncertain.

Much Ado About Nothing: The founders of Uber and Lyft, among others, declared that people would no longer need to own cars and that ownership would fall as a result. Instead, car ownership is rising.

Commercial

Shocking: I know that a lot of you will be stunned to hear this but Sears hasn’t gotten their shit together a year after filing chapter 11 bankruptcy and will be closing another 100 stores.

Data Dive: It’s one thing to collect data, but real estate players need to learn how to glean insights from the data that help them make strategic decisions.  The future belongs to those who figure it out best.

Residential

Tainted: Airbnb is nothing like WeWork in that it actually has a viable business plan as opposed to a massive asset/liability mismatch. However, the co-working giant’s IPO failure could haunt the home-share giant when it plans to come public in 2020.

Finishing Strong: 2019 housing starts were way behind 2018 for most of the year.  However, starts are closing strong and will likely be above 2018 levels by year end.

Profiles

Not-Com: More scathing commentary from Derek Thompson of the Atlantic on the difference between the internet bubble of the late 90s and today’s crashing unicorns:

What we’re seeing today isn’t a dot-com bubble. If anything, it’s a not-com bubble—a period of inflated expectations for companies that had no business being valued like pure tech companies in the first place.

No Bargains: Discounts used to be the norm when purchasing another investor’s existing interest in a private equity fund.  They are not anymore.

Bailout? In the latest example of bad ideas following bad investments, NYC taxi owners are asking for a bailout as the value of their medallions have fallen by as much as 80% as ride sharing has risen in popularity.

Chart of the Day

I find this chart from Political Calculations on the conversion of ownership and rental costs fascinating but it requires a bit more explanation:

Before going any further, we should recognize the data reported by the Consumer Expenditure Survey is spreading all these payments out over all household consumer units in the United States. In 2018, there were an estimated 131,439,000 household consumer units, where 48,632,430 (37%) paying rent, an equal number of homeowners making mortgage payments, and 34,174,140 homeowners (26%) with no mortgage payments.

Doing the math for renters, multiplying the average $4,167 in annual rent payments by 131,439,000 household consumer units, we estimate the total rent paid in 2018 adds up to $547.7 billion. Dividing that result by the estimated 48,632,430 rent payers, we find the average annual rent is $11,262. Dividing by 12 gives an average monthly rent of $938.51, which is indeed slightly higher than the $935 per month figure we previously calculated for 2017.

Doing the almost identical math for homeowners making mortgage payments, we estimate aggregate mortgage payments to be $657.5 billion, with the average annual total of mortgage payments working out to be $13,519, which corresponds to an average monthly principal and interest mortgage payment of $1,126.58.

Average Annual Home Ownership and Rent Expenditures per U.S. Household Consumer Unit, 1984-2018

 

WTF

Whacked: An elderly woman attacked her boyfriend with a metal detector when she caught him watching porn because Florida.

Sign Me Up: Rage yoga classes which include cursing and alcohol are now a thing and I’m here for it.

No Harm, No Foul: Four inmates escaped from a prison in Texas multiple times only to return with whisky, making them quite possibly the most honest people on earth.

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

Visit us at Landmarkcapitaladvisors.com

Landmark Links October 22nd – Circling the Drain

Landmark Links October 18th – Crowded Out

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Must Read:  Crowdfunding was once a darling of the startup space, but some early adopters have pivoted into other areas and VC backing has fizzled.  Here’s a snapshot at how ugly things have gotten for the once high-flying niche:

Globally, venture capital for crowdfunding peaked in 2015 at about $76.4 million and plummeted to $25.7 million in 2017, according to real estate tech research firm CREtech. This year, it’s bounced back to $72.2 million year-to-date.

So far this year in the U.S., four firms — Groundfloor, RealtyMogul, Vairt and Wealth Migrate — cumulatively attracted a paltry $9.8 million.

Economy

Steady and Slow: Economic growth has clearly slowed.  However, there is still little sign of a recession on the horizonSee Also: Long-term inflation expectations hit a record low according the the NY Fed.

Running Out of Gas?  The second US shale boom seems to have peaked with output growth expected to slow even further in 2020.

Worth A Shot: The US should issue long (50-100 year) term treasury debt with rates as low as they currently are, even if only on an experimental basis.

Commercial

Harder Than You Think: One would think that shorting mall owners by betting against their debt would have been a profitable strategy in recent years.  However, one would be wrong and the closing of Alder Hill’s hedge fund is an example of how difficult it can be to make money even when you have the macro thesis correct.

Pumped Up: There are now 23% more gyms in retail centers than there were in 2010 as landlords continue to embrace a once-shunned tenant group.

Timing Isn’t Everything: Blackstone’s highly leveraged $39B purchase of EOP on the eve of the Great Recession should have brought it down.  Instead, early flips out of non-core assets and prudent management allowed the private equity behemoth, which just sold its final asset from the EOP transaction, to reap a $7B profit.

Residential

Positive Territory: It’s really difficult to see how we end up in a recession without a meaningful (20%) decline in new home sales from where we are today.

Priced Out: In the not-too-distant  past, making a six-figure income virtually guaranteed that you could afford to purchase a house.  Today, a record number of six-figure-income families rent, as student debt and meager savings cloud their financial future – and this is no longer something limited to expensive coastal markets.

Imagine That: A new report shows that new apartment supply in Toronto is about to surge in a major way after the removal of rent controls which no one except for pretty much every credible economist on earth ever could have seen coming.

Profiles

Hemorrhaging Cash: This is just an incredible quote from Derek Thompson of the Atlantic on why urban lifestyles – for young people in particular – are about to get a lot more expensive thanks to companies that will have to raise costs to survive:

If you wake up on a Casper mattress, work out with a Peloton before breakfast, Uber to your desk at a WeWork, order DoorDash for lunch, take a Lyft home, and get dinner through Postmates, you’ve interacted with seven companies that will collectively lose nearly $14 billion this year. If you use Lime scooters to bop around the city, download Wag to walk your dog, and sign up for Blue Apron to make a meal, that’s three more brands that have never earned a dime or have seen their valuations fall by more than 50 percent.

Defying Gravity: Want to know why credit card interest rates are still sky-high despite falling rates elsewhere?  Look no further than generous rewards programs.

Underdog: How Barry Diller went from Hollywood mogul to building one of the most successful empires in the world by investing in a hodgepodge of internet unknowns and has-beens.

Chart of the Day

percentage change renting

WTF

Balanced Diet: A man has eaten almost nothing but macaroni and cheese for the past 17 years and is alive to talk about it because Florida.  Side note: my 5-year old daughter would absolutely do this if we allowed her to.

Still More Lucrative Than Art History: There is an online university in Italy that is offering a degree designed for those who want to become social media influencers because millennials.

Gotta Hear Both Sides: A man who was found nude inside a plumbing business is facing charges after being accused of using a forklift and a hammer to wreak havoc before taking a shower there because Florida.

Triple Threat: A middle school teacher did meth and took Xanax before passing out in Burger King during his lunch break.  He was later caught masturbating in a hospital exam room because Florida.

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

Visit us at Landmarkcapitaladvisors.com

Landmark Links October 18th – Crowded Out

Landmark Links October 15th – Last Line of Defense

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Must Read: Amazon has taken a substantial lead in the last mile distribution race.  However, Walmart and Target have thousands of stores close to consumers that they are increasingly using as warehouses, posing the biggest threat that Amazon has faced to date.  The only way that the online juggernaut can maintain its position is through a massive investment in logistics over the coming years.

Economy

Underestimated: The pro-globalization consensus among economists in the 1990s was that trade contributed little to rising inequality.  However, this consensus has proven to be wrong – at least in the short to intermediate term – and has given rise to protectionism.

Storm Clouds: Two thirds of economists surveyed by the Wall Street journal say that the manufacturing sector is now in a recession.

Flipped: The yield curve isn’t inverted anymore.

Commercial

Circling the Drain: WeWork’s bankers are racing to secure new debt financing since bigger idiots in the equity market never materialized.  Reports are that the company is burning cash quicker than expected and could potentially run out as early as December if new funding is not obtained.  I knew that this company was overvalued but the speed with which it has crumbled is breathtaking.  Meanwhile, WeWork is closing its $42k a year new-age preschool after this school year.  Shocking, I know.  In other news, WeWork now has to decide between two financial rescue plans: one led by SoftBank and one led by JP Morgan Chase.

Size Matters: Smaller warehouse rents are growing faster than mega warehouse rents thanks to massive demand for last mile distribution in expensive areas.

Residential

Only Way Forward: It’s looking increasingly likely that prefab construction will need to play a role in affordable housing development going forward.

Nowhere Close: A decade into the recovery, there are still 26% less California real estate agents than there were at the peak of the market.

Profiles

Up in Smoke: The share prices of marijuana companies is tumbling and capital markets are drying up as sales have disappointed, leaving startups scrambling for financing.  See Also: The continued impact of the black market on legalized cannabis should not be underestimated.

A Look Inside: As a lifelong Giants fan, Eli Manning has always been somewhat of a confounding enigma: a two time Super Bowl MVP who gave me my best football memories, yet has been as frustratingly inconsistent as a typical marginal starter 80%+ of the time.  This deep look at Manning through the eyes of his friends and teammates is one of the best sports articles that you will read.

Impostors: High net worth financial advisors are increasingly calling themselves multi-family offices.  The difference between the two can be a bit fuzzy but there are two big differentiators: scale and direct deals.

Chart of the Day

House prices in terms of national wages are somewhat above the median historical ratio but far below the bubble peak.

Source: Calculated Risk Blog

WTF

Honest Mistake: A junior hockey team from Long Island has been suspended for the season after pooping and peeing in an opposing team’s hockey bags.

Mug Shots of the Week: An Arkansas woman arrested on drug charges told police that her brother fed her a meth sandwich.  In related news, Sloth from Goonies has actually aged quite well.

Your Tax Dollars at Work: A college professor from the University of Washington has written an academic paper claiming that SpongeBob SquarePants is violent and racist.

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

Visit us at Landmarkcapitaladvisors.com

Landmark Links October 15th – Last Line of Defense