Stephen Blank

Stephen R. Blank joined ULI in December 1998 as Senior Fellow, Finance. His primary responsibilities include: expanding ULI’s real estate capital markets information and education programs; authoring real estate capital market commentary; participating as a principal researcher and adviser for the Emerging Trends in Real Estate series of publications; organizing and participating in real estate capital markets programs at ULI events worldwide; and participating in industry meetings, seminars, and conferences. Prior to joining ULI, Blank served from December 1993 to November 1998 as Managing Director, Real Estate Investment Banking of Oppenheimer & Co., Inc. His responsibilities included: structuring, underwriting, and executing corporate financings including initial public offerings of common and preferred shares, unsecured debentures, and convertible bonds; property acquisitions, dispositions, and financing; and financial advisory services including mergers and acquisitions, corporate restructurings, and recapitalizations.

Recent volatility in the debt capital markets, caused primarily by the mere suggestion that the Federal Reserve might scale back its bond-buying program later this year, is causing any number of transactions to be put on hold. With rates in flux there seems to be “paralysis of analysis” taking place.
Among the best bets highlighted in the 2013 edition of Emerging Trends in Real Estate was the advice to lock in then-current rates rather than stay with floating-rate debt. Here we are roughly seven months later and yet another prediction is coming true, as we see that ten-year U.S. Treasury bonds are at a 22-month high and 30-year bonds are at their highest level since September 11.
Readers should not need to be reminded that the global economy is fragile. While the United States may be the “cleanest dirty shirt in the closet,” Europe continues to struggle and China faces the possibility of a slowdown. The United States is still not strong enough to carry the burden of economic growth by itself.
At ULI’s Real Estate Finance and Investment 2013 conference in San Francisco, much of what participants heard and said reflected themes we have been echoing since the beginning of 2012: “It’s the economy, stupid” and jobs drive the economy; there’s a wall of money aggressively looking for current yield; and the eurozone’s economy is a mess.
The Q2 Real Estate Roundtable’s Sentiment Index remains flat, tempered by political and macroeconomic uncertainties. Asset values in core markets continue to rise with debt and equity readily available.
ULI senior fellow Stephen Blank’s highlights from panel discussions at ULI Spring Meeting, including an increasing flow of foreign capital into the U.S. real estate markets, increasingly competitive Euro-lending business, and the pricing of real estate debt.
Insurance companies seem to be nearing lending capacity, while securitized lenders continue their comeback as more and more companies establish platforms and more and more institutional investors enjoy the relative value of “super senior” commercial mortgage-backed securities.
The National Council of Real Estate Investment Fiduciaries released its first-quarter results for the National Property Index. Returns for the quarter ended March 31 equaled 2.57 percent, composed of appreciation equal to 1.18 percent and income equal to 1.39 percent; almost the same as the prior quarter.
Industry forecasts are normally made in January (the beginning) or July (the mid-way point) of the year. But why not get a jump on things and forecast the balance of the year as well as 2014 from the viewpoint of the end of April? ULI senior fellow Stephen Blank shares his views on the economy, real estate industry, and the state of the capital markets.
Priced to perfection can easily turn into “priced to disappoint” as competition encourages investors to accept lower and lower yields as the price of entry. But our concern extends past the point of acquisition, as an investor can live with paying a little too much for a property by accepting a lesser initial return on investment.
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