How to Structure Apartment Building Investment Partnerships by Brian Ward of TCG Capital.

MHN Online has a nice piece out this morning talking about what institutional and private equity equity providers are looking for in their apartment building investment deals. According to Brian Ward, CIO of TCG Capital Markets, the requirements are much tighter than just a few years ago. Here are the high points:

  • Align the style and needs of the capital source with the operator. A long term operator shouldn’t be matched up with private equity that needs short term holds to clear their return hurdles.
  • Equity capital today generally comes in two two types: preferred equity or joint venture (See the table linked in the article for a good breakout of when to use each).
  • Blind pools are very difficult to get funded today —even the best and most sophisticated operators have had trouble executing this type of equity raise.
  • There must be local knowledge on the management team, both lenders and investors want their operators close by.
  • Operators must have Continue reading How to Structure Apartment Building Investment Partnerships by Brian Ward of TCG Capital.

Black Swan Taleb: bad math and the misundersting of risk caused the financial meltdown

This article argues that the crisis of 2007–2008 happened because of an explosive combination of agency problems, moral hazard, and “scientism”—the illusion that ostensibly scientific techniques would manage risks and predict rare events in spite of the stark empirical and theoretical realities that suggested otherwise.

Nassim Taleb on Value At Risk VAR

Conclusion: “The captain goes down with the ship; every captain and every ship.” Nobody should be in a position to Continue reading Black Swan Taleb: bad math and the misundersting of risk caused the financial meltdown