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Arthur, I hope you managed to get to my post of “100 Years of Chicago Land
Values”. A wild orgy of land speculation has preceded every depression (not the
mealy mouthed “recession” that has fearfully taken its place). It’s a pity that neo-Classicals have read land out of their ‘discipline’
by making it a part of Capital (even though the differences between nature and
man-made products is self-evident). It makes analysis difficult or impossible. Then they confused things still more with their proliferation of “capitals”. Moreover, depressions have taken place in a relatively free market.
With our heavily if whimsically controlled economy the necessary part of the
crash the collapse of land prices may not altogether be allowed to take place.
The economy may ‘hang up’ – This means many years of financial stagnation while the people who have
been trained not to see the obvious try all kinds of tricks to get out of the
jam. Harry ******************************* of 818 352-4141 ******************************* From:
[EMAIL PROTECTED]
[mailto:[EMAIL PROTECTED] On
Behalf Of Cordell, Arthur: ECOM Report on Business: Canadian Reichmann
knows property meltdowns: ‘It's time to sell'
30 June 2005 Philip
Reichmann is fighting a major battle to save the $2-billion deal to sell his
real estate empire. For
several weeks, rumblings have been building from a group of major institutional
shareholders who are unhappy with the $15.50 per unit offer made for O&Y
Real Estate Investment Trust by a group led by Brookfield Properties Corp. Now,
just a week before shareholders are to vote on the transaction, Mr. Reichmann
has taken out newspaper ads and hired a firm to call thousands of small
investors and urge them to vote. Mr.
Reichmann's message is simple. It's time to sell. “I
think the euphoria out there and the expectations that it drives is just asking
for trouble.” said Mr. Reichmann, who at least for the time being heads
one of the country's best-known publicly traded real estate companies. “I
think it is the time for O&Y REIT holders to get out. It is time to sell
this company,” he said yesterday in an interview with The Globe and Mail.
If all goes as planned, that is exactly what will
happen later this summer. Next week, investors of O&Y Properties Corp. and
its related REIT will be asked to give their blessing to the sale of O&Y's
massive office portfolio. The bid is for the holdings of both companies, which
together own 25 office towers across the country. But
after months of drumming up interest from potential buyers and three weeks of
intense negotiations with the winning group of bidders, Mr. Reichmann is now
facing the most serious threat yet to his plan to sell it all before the
overheated commercial real estate market runs out of steam. Response
to the bidding group's $13-a -share offer for parent O&Y Properties Corp.
has been favourable. But sources say a group of six institutional investors
with sizable holdings in the underlying REIT have indicated that they don't
like the $15.50 offer on the table for the income trust units. They don't like
the tax fallout that will come from the sale of the trust. In fact, some have
indicated they don't like the idea of selling the real estate holdings at all. Depending
on how many unitholders vote, this group of six could have enough clout to kill
the deal. Such
an outcome, Mr. Reichmann warned yesterday, would be “a terrible
mistake.” It
would be a shame, Mr. Reichmann said, if a small group of investors with
specific interests made the decision for everyone. Besides, Mr. Reichmann said,
he believes that his decision to sell is in the best interests of all
shareholders — at O&Y Properties and at the REIT. Office
towers are trading at sky-high prices, pumped up by a flood of money looking to
invest in real estate and the belief that valuations will continue to rise. It's
a belief that Mr. Reichmann, who had a ring-side seat at the last real estate
meltdown, described as “dangerous.” “There is too much enthusiasm. You know in the real estate game if
you wait a little too long you get killed. I've been there, done that. I don't
want to do it again. I want to get out at the right time.” Trouble
is, the group of institutional investors don't see things the same way. They
like the returns O&Y REIT has brought to their funds. The proposed sale
also creates a huge headache for them because it will require them to find a
new place to reinvest the money they had in O&Y. Mr.
Reichmann said he understands their situation, but argued that it is impossible
for things to continue as they are. O&Y's parent firm will be sold, he
said, either to the He
said this turn of events has put him in a strange situation — arguing for
the sale of a company that he did not want to sell, but felt he should due to
market conditions. “This
is very awkward for me because here I am, at 47, standing up and saying
‘I want to sell this company because I think it is the right thing.' The
truth of the matter is I don't want to sell this company. At 47 years old I do
not want to start another career and I am too young to retire. And that golf
thing — it's just a line.” Still,
he said, investors who put their money in the REIT because they trusted his
judgment must now also trust his decision that it is time to head for the
exits, even if he is going against the crowd. “It
requires faith that I know what I am doing. But I'm not afraid to be out there
on my own. I have training that other people don't have — from my
experience. I know what happens when you hold on for too long.” Document
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