NewBase 19 April 2024 Energy News issue - 1717 by Khaled Al Awadi.pdf
ANNUAL DS CONFERENCE- Alon Solomon
1. All Rights Reserved
ANNUAL DS CONFERENCE- US REAL ESTATE
Alon Solomon- C.E.O
Asaf Arieli-Business Development Manager
2. Just saw recruiting billboard (by AOL) on 101 for the first time in years. Great sign that 2011 will be prosperous for many.
January 1 at 1:56am via Twitter · Like · Comment · @paglo on Twitter
Are things getting better?
3. Real Estate Market in the US
• Macro economics conditions
• Capital Markets
• Real estate Market conditions
• What the does the future holds for the US economy?
• What should you invest in?
• Global Paragon
4. The Good, the Bad and the Ugly
The Good
• U.S. GDP back to 2007 levels
• S&P 500 is up for straight two years
• Retail Sales excluding auto & gas up $12.6B from pre-recession levels
• Bush Tax cuts are extended
• The Private Sector added 1.3M jobs in 2010
• Corporate Profits up $48B from previous peak in 3Q 2006
• ISM manufacturing index is up 17% from pre-recession levels
The Bad
• Unemployment Rate at 9.4% or double 2007 levels
• Consumer Confidence remains 42% below pre-recession levels
• Net Exports down 10% from pre-recession levels
• Single-Family home sales 35% below 2005 peak
• Single-Family home prices down 23% from the 2006 peak
The Ugly
• Household Debt remains elevated at 91% GDP
• Public Debt, at 92% of GDP, is the highest level since WW2
• Creation of Government job vs. Free market jobs
• Political Uncertainty: New health care costs, new taxes, what will Obama do next?
Sources: BLS, BEA, ISM, U.S. Census Bureau
9. Increase in Government jobs and benefits
Sources: The Economist, George Washington University, White house office if information and regulatory affairs
10. Capital spending by corporate America is key to recovery – profit trend positive
Sources: BEA
29. Mortgage Crisis Overview- Secondary Market- Competition
Home Buyer
Mortgage Bank
Home Valuation
Income Check
Home Buyer
Israel Market US Market
Repayments
Mortgage Loans
Repayments
Mortgage Loans
Brokers
Appraisers
Key
Safeguards
Bank Checks
Independent Checks
Cash Flow
Mortgage
Bank A
Mortgage
Bank B
Mortgage
Bank C
Mortgage
Bank D
Mortgage
Bank E
30. Home Buyer
Mortgage Bank
Home Valuation
Income Check
Mortgage Bond
Market
Mortgage Bank
Home Buyer
Israel Market US Market
Repayments
Mortgage Loans
Repayments
Mortgage Loans
Acquisition of
Mortgage Pool
Mortgage Pool
Cash Flow
Brokers
Appraisers
Rating
Agencies
Key
Safeguards
Bank Checks
Independent Checks
Cash Flow
Mortgage Crisis Overview- Secondary Market- Securitization
31. Home Buyer
Mortgage Bank
Home Valuation
Income Check
Mortgage Bond
Market
Mortgage Bank
Home Buyer
Israel Market US Market
Repayments
Mortgage Loans
Repayments
Mortgage Loans
Acquisition of
Mortgage Pool
Mortgage Pool
Cash Flow
Brokers
Appraisers
Rating
Agencies
Key
Safeguards
Bank Checks
Independent Checks
Cash Flow
Mortgage Crisis Overview- Secondary Market- Securitization what went wrong?
32. • 2/28 loans
• Below 620 Credit Score
• NINJA loans
• Financial Engineering
The rise of the sub-prime mortgage market
41. Market has firmed up for class “A” and “B+” larger assets in better markets
• Market is efficient and organizes
• Substantial amounts of equity raised: what are the other alternatives?
• CAP rates decreasing
• Increase of Real prices
Market Divergence between quality of assets
42. Market Divergence between quality of assets
Class “C” and smaller assets
• Market inefficient and disorganized
• Agency loans not focused on smaller assets
• Collection issues challenge cash flows
• Continued pressure from distressed assets
• Investment opportunities to experienced investors
49. Apartment Cap Rate Trends – Average Cap Rates vs. 10-Year Treasury
Sources: CoStar Group Inc. NREI, Real Capital Analytics
50. U.S Apartment Buyer Composition
Sources: Marcus & Millichap Research Services, Real Capital Analytics
51. Why the Long-Term outlook for the U.S. apartments is extremely favorable
1. Population growth: constant immigration, Echo boomers
2. Sharp decrease in new supply
3. Affordability: rent vs. own
4. Employment growth
5. Weak dollar
52. Short term growth – Uncertainty
Job growth is hampered by psychology and uncertainty
• Corporations are sitting on cash
• Productivity is at all time highs
• Temporary employment is up 25%
• Small businesses are concerned about health care costs and tax
increases
• Record deficits and national debt
• Extremely hard to qualify for any loan, both private and business loans
• Conservatism is slowing the rate of recovery
53. What type of investors will eliminate uncertainty?
•Cash Flow producing assets
•Experienced local investors
•Close to the market
•Cost Savings capabilities