Starwood's recently announced sharp reduction in the amount of money they will return to redemption requests is going to inform many clients in their private funds that the value of these investments is likely a fraction of what they are listed at- fake valuation levels whose credibility depends entirely, in real life, on what can actually be redeemed. Starwood held their private share values up in a completely non-credible way and backed that with high % of request payments on redemption until NOW, they can't come up with the cash anymore. Anyone who believed the flim-flam-paying redemptions from reserves and new borrowings - NOT cash flow -and holding up privately determined share values is getting a wake up call now. Redemptions/withdrawal from investments will almost certainly spread to other investments to the extent those remain liquid. What could be more liquid than $NVDA up 4-5x in last year?
Red Lobster etc: there should be an extended clawback period for preferential transfer when PE does sale/leasebacks and pays dividends and leaves the operations underwater. Maybe 5 years... One real question on this: who is on the other side of these sale/leasebacks? What investor buys the property when he lessee is likely to be bankrupt in the foreseeable future? Either astute way to buy or really bad decision. I bet the latter...
I hate PE people with my whole heart. Example of why: One of the last deals we sold out of, the finance guy overpaid for my share about 200k. I called him up and told him “this a good problem to have, but I’m fairly certain you guys overpaid me. Just double check, and send me your wire instructions, and I’ll get it back to you today.”
Crickets.
Over the next several hours, they attempted to have the whole wire returned. (“Good luck you f’ing idiots. They wouldn’t do that for Jesus.”) They also tried to coerce my senior partner to send the money back to which they replied, “Are you high? Just send him your wire information.” The PE guy finally called me direct and asked if I could overnight a check; anything but share stupid wire info.
It reminded me of an old saying in the oil business, “Those who trust the least should be trusted the least.”
Thank you so much! Also, here in Johnson City very similar thing. A whole huge neighborhood of affordable housing was vacated for improvements and bought by an investor. They started doing some, but all work has stopped. No one has any information on it while all those apartments sit empty. I hear it's the same in NYC - there are thousands of vacant apartments: https://www.thecity.nyc/2024/02/14/rent-stabilized-apartments-vacant/
Rudy, you have quite a "Borgeshmord" (sorry Mason) to digest. One point. In The Free State of Florida, the same elected people bitching about the dopes in DC shouldn't control what happens in say, Alabama, decided that localities cannot regulate STR's. Coral Gables is a lit different than South Beach, but if their city councils decide to regulate them, too bad. Honest politicians are who once bought, stay bought. More to say, but let's kick it off there. Plus unique to Florida are new requirements for condos to have structural inspections done and keep reserves instead of kicking the can down the road until it collapses. Plus insurance. Lycky we're protected from darg queen bingo.
Thought you might like this
https://substack.com/@thedutchinvestors/note/c-57918062?r=9wy0f&utm_medium=ios&utm_source=notes-share-action
Starwood's recently announced sharp reduction in the amount of money they will return to redemption requests is going to inform many clients in their private funds that the value of these investments is likely a fraction of what they are listed at- fake valuation levels whose credibility depends entirely, in real life, on what can actually be redeemed. Starwood held their private share values up in a completely non-credible way and backed that with high % of request payments on redemption until NOW, they can't come up with the cash anymore. Anyone who believed the flim-flam-paying redemptions from reserves and new borrowings - NOT cash flow -and holding up privately determined share values is getting a wake up call now. Redemptions/withdrawal from investments will almost certainly spread to other investments to the extent those remain liquid. What could be more liquid than $NVDA up 4-5x in last year?
Red Lobster etc: there should be an extended clawback period for preferential transfer when PE does sale/leasebacks and pays dividends and leaves the operations underwater. Maybe 5 years... One real question on this: who is on the other side of these sale/leasebacks? What investor buys the property when he lessee is likely to be bankrupt in the foreseeable future? Either astute way to buy or really bad decision. I bet the latter...
I hate PE people with my whole heart. Example of why: One of the last deals we sold out of, the finance guy overpaid for my share about 200k. I called him up and told him “this a good problem to have, but I’m fairly certain you guys overpaid me. Just double check, and send me your wire instructions, and I’ll get it back to you today.”
Crickets.
Over the next several hours, they attempted to have the whole wire returned. (“Good luck you f’ing idiots. They wouldn’t do that for Jesus.”) They also tried to coerce my senior partner to send the money back to which they replied, “Are you high? Just send him your wire information.” The PE guy finally called me direct and asked if I could overnight a check; anything but share stupid wire info.
It reminded me of an old saying in the oil business, “Those who trust the least should be trusted the least.”
Every time I read your posts I wonder how evolution has produced such a horrible 'civilization' .
Someone once asked me, “Why are people so terrible?”
A better question is “Why are so many people so good?”
Thank you so much! Also, here in Johnson City very similar thing. A whole huge neighborhood of affordable housing was vacated for improvements and bought by an investor. They started doing some, but all work has stopped. No one has any information on it while all those apartments sit empty. I hear it's the same in NYC - there are thousands of vacant apartments: https://www.thecity.nyc/2024/02/14/rent-stabilized-apartments-vacant/
Rudy, you have quite a "Borgeshmord" (sorry Mason) to digest. One point. In The Free State of Florida, the same elected people bitching about the dopes in DC shouldn't control what happens in say, Alabama, decided that localities cannot regulate STR's. Coral Gables is a lit different than South Beach, but if their city councils decide to regulate them, too bad. Honest politicians are who once bought, stay bought. More to say, but let's kick it off there. Plus unique to Florida are new requirements for condos to have structural inspections done and keep reserves instead of kicking the can down the road until it collapses. Plus insurance. Lycky we're protected from darg queen bingo.
Melody and Tricia know this. You all Rock
I hate emailing