Zell was on a panel focusing on real estate, moderated by Michael Milken. The bullet points below are a few of the points that Zell made.
- The commercial real estate market will do better than the residential market because demand is larger than supplies.
- Any time that the U.S. government has tried to increase home ownership by over 62%, a disaster has occurred.
- Zell sees some debt as a very attractive buy at 40¢ on the dollar.
- Groups with large pools of investments such as CALPERS and insurance companies cannot sit on the sidelines forever. If they have a 7% bogey to meet and they are earning 2% on their investments, they are going to need to earn more.
- The real estate market and overall economy has changed from years past. Couples are deferring marriage. It used to be that couples married a few months after college graduation. Now, it can be ten years.
- Fannie Mae and Freddie Mac are still making loans to owners of apartment buildings. It is part of their mandate.
- Zell spoke about looming inflation. Even though the CPI indicated inflation was low, the average American knew better. People were buying real estate to outpace inflation.
- He pointed out that one of the most overlooked statistics is that farmers plan on planting 12 to 15% more corn next year. This is on top of the current record planting.
- $120 oil is unsustainable.
- There are always opportunities. However, these opportunities are not always scalable. The amount of liquidity in the world is in excess of supply. The U.S. dollar is in a liquidity problem.
By Holmes Osborne of www.holmesosborne.com and www.stockroyalty.com