Over the Top Institutional Analysis vs. Old School Owners
Hey guys,
Saw a post by CRE Analyst regarding Blackstone's recent purchase and was thinking about today where it seems there's a huge emphasis on complex models and over analyzing deals where as, 30-50 years ago or more when many big real estate families were around there was none of this.
Which do you see is right, because in the comments CRE is saying all of this analysis and thought is needed to go into a deal, etc but meanwhile the older guys were like its $x basis and I know what I can get for rent, let's move forward and they do well. You also see this with LPs like PIMCO that again over analyze, oh we need to bifurcate operating and sale cash flows etc. This is a good deal because of xyz complicated reason and they end up getting hosed on deals meanwhile large NYC families still do really well with a more basic approach and thought process.
Anyone else agree? Here's the thread, I see it as academics coming into RE. There was a comment that said let's replace cap rate with yield, its like yeah no duh that's literally what that is in a simple form. Also on CRE's part, how can they justify Blackstone getting 5% growth a year when many owners are assuming 0% growth or negative to be safe, seems like it's a oh it's Blackstone and they'll get some absurd return just because it's them.
Post: https://www.linkedin.com/feed/update/urn:li:activ…
Edit: And, no idea why they are saying debt 7% and that's how they get to a levered return, what is the 7% that the debt is getting them? I understand what levered is, I've just never seen this way to calculate it.
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