I am blogging over at Range Light Partners these days.  RLP is a new entity that I am proud to be a part of, that is an adjustment to the state of the economy.  It is fee development and consulting based.  Please visit our site: Range Light Partners and be sure to check in on the company blog where I a occasionally scribble.

I may come back over here in time but, for now, please bookmark Range Light Partners.




As a kid I loved the whole Chronicles of Narnia series, it took getting older to truly understand the meaning of these wonderful books.  I have kept a couple of C.S. Lewis books in my nightstand for years and was recently thumbing through The Screwtape  when I stumbled on this jewel:  “Men are not angered by mere misfortune but by misfortune conceived as injury.”

C.S. Lewis at work.

Reflect on that statement a moment while I back up.  The Screwtape Letters were written in the voice of a senior devil giving lessons to a junior devil on how to manipulate mankind.  Now, here’s the rest of the paragraph – all of this under the heading of “Screwtape on Time:”

Men are not angered by mere misfortune but by misfortune conceived as injury.  And the sense of injury depends  on the feeling that a legitimate claim has been denied.  The more claims on life, therefore, that your patient can be induced to make, the more often he will feel injured and, as a result, ill-tempered.”

I would add the phrase “…and the more likely they are to call an attorney.”  No, I am not equating attorneys with Msr. Screwtape – they serve an extraordinary role in our society.  I am just saying that it would be far better in a conflict to reflect on the above statement and to make sure that in a business (or personal) disagreement, the split is not caused by mere happenstance.

In real estate, we live in a risky world with long time horizons wherein circumstances change.  Lord knows, none of us expected these last few years to continue apace.  But these were misfortunes and not injuries and we need to make sure we separate the two.  Not to say that there are not bad actors, sadly our industry is rife with people that you will only do one deal with, but make sure you distinguish between a downturn caused by the market from one caused by intent before you lawyer up.  It will save you a lot of heartache, potentially a friendship or two and a lot of sleepless nights.

Dan Phillips out of Houston is doing some really daring things with recycled building materials – take a look at this insightful talk by this innovative builder:

ULI’s Nashville District Council held it’s annual Real Estate Trends Conference this morning in conjunction with the good folks at the Nashville Chamber of Commerce.  Dean Schwanke, the Senior VP at the ULI Center for Capital Markets & Real Estate was the presenter this year.  The “Emerging Trends” study is a compilation of close to 900 interviews conducted with real estate “experts” around the country – somehow I slipped onto the list for the last couple of years, so you know it’s good (tongue planted firmly in cheek.) If last year’s overall menu presentation was cold and rancid meat loaf, this year’s menu looked like the three week old ham sandwich you found in the leftover drawer of the refrigerator – it might be edible, but I wouldn’t risk it.  The full report is available through the ULI website by clicking here.  From my scribbled notes, the following bullet points to consider:

  • Expect another 30-50% decline in asset values for most commercial real estate.
  • Good news – investor expectations for returns are being re-calibrated.
  • New term – “financial engineering,”  as in “we are going back to basics, no more financial engineering.”
  • More than 50% of the respondents felt that equity was over-supplied.
  • BUT, 78% felt that debt is undersupplied although the life companies are stepping up.
  • It is anticipated that in 2011 the public equity REITs will be the most active buyers – they are generally flush.
  • If you want to know what the new normal looks like, set your sites on the 2003-2004 numbers.

The general tenor of the discussion was that while we have not been knocked out in this fight, we are definitely taking the standing eight count.  On a national (and I think local level too) the best asset classes to be looking at in the coming year are moderate and high income apartments.

The most worrisome slide was towards the very end of Schwanke’s presentation…well, the one showing the gentlemen wearing sombreros and taking a siesta as this year’s advice to developers was worrisome for me…but, the slide I am talking about concerned the governmental picture.  Unsustainable levels of debt at the municipal, state and federal level, anticipated spikes in interest rates, gnawing continued high unemployment.  Here in Nashville, we should fare better than most – our city and state have been well run, overall, and in general, we behave like adults towards business.  But, I suspect this is the same set of facts that most Americans know in their guts and that’s what is keeping the fear quotient up and preventing businesses from cranking up employment.

After a short break, a panel discussion was held with Larry Kloess of HCA, Bill Nigh with Bank of Nashville, Randy Rayburn of Sunset Grill and other delectable restaurants fame, and Laquita Stribling with Randstad, a local employment agency.  This was a well rounded and intriguing presentation.  A few highlights again from my legal pad:

  • In banking, it’s back to the basics.  Do you have a net worth? Do you have bankable cash flow?  The regulatory environment is driving the uncertainty that keeps banks from lending.
  • From Randy, we learned what an important part of the local economy the hospitality industry is – it’s big.
  • In discussing challenges, Laquita pointed out that 15% of Nashville’s employment base is within 10 years of retirement – there is a significant gap between retirements and new graduations, making it critical that we keep our graduates from all of our fine schools in town.
  • Larry mused about the effects of the healthcare reform bill essentially telling us that it is so complicated and convoluted and it is being layered onto an industry that is so complicated and convoluted that….well no one knows.  He did tell us that there is a rapidly growing problem in the shortage of primary care providers and to expect future visits to the doctor to be more like trips to the dentist: the hygienist works on you for 45 minutes then the dentist comes in and asks about your handicap.

The good news is that we are in a city that is considered highly creative with a great brand.  We are also blessed with pretty good governance and a business and real estate community that is truly gifted in what they do.  As I am scribing this, over the wire comes news that there’s a good chance that Community Health is making a run at Tenet and that combined they would become the second largest hospital management company.  With HCA first and the aforementioned merger second, the Nashville area would truly become ground zero for healthcare.

We still have a few years of rough sledding, but there are few other places I would rather be than right here in Middle Tennessee…hmmm, with that rhyme maybe I’ll try my hand at songwriting!



If the following image doesn’t scare the living daylights out of you, hold a mirror under your nose and see if it fogs:

That “hockey stick” is not an Al Gore fantasy, it is our (the U.S. of A) money supply.  What does it mean?

1. You can now understand why Ben Bernanke and company are keeping interest rates down.

2. You can now see why gold continues to appreciate.

3. You can realize that the Feds are out of ammo.  Another trillion dollar run at the printing presses will put the dollar on par with the now failed cruzeiro.

There is only one path, and that is to get the free market moving again.  The way we do that (we’ve done this before) is by returning some semblance of a rule of law.  What we have had out of Washington has been nothing less than rule by fiat.  Businesses cannot anticipate what to do.  Banks cannot lend with any kind of economic sense.  Our tax policy is the laughing stock of the developed world.

Let’s cut the chains that are holding the free-enterprise system in check!  And don’t give me that meme about “that’s what got us into the trouble we are in…”  No, we got into this mess because we could afford to…now we can’t afford it anymore.  We got here with do-gooder policies that expressed more about how we “felt,” than economic reality.  Fact: you can’t give a loan to someone that cannot afford to pay it back and not face consequences when it comes due.

OK, I’m done ranting for now, but if that chart doesn’t steam you…well, maybe you have no “feelings.”

An excellent article over at on the implications of continued high unemployment among the youth.  Spain, which is far further along the socialist utopian scale than we are, has an emerging social class they call “jovenes,” or “youngsters.”  To belong, you have to be between 25 and 35 and a) be living at home because you can’t earn enough bouncing around jobs and b) receive unemployment benefits from the state and c) use your savings for a good time.  They have also earned another nickname, the “Atlas Generation,” because they are carrying the weight of the world and will be in charge of paying for the “economic sins of their parents.”

Why is it so difficult for these folks to settle down into a steady job, raise a family and get on with life?  Well, you have to look at the laws.  The Spanish government wants to protect workers from those evil corporations so they decree some things:

1. Four weeks vacation a year minimum.

2. A very high minimum wage.

3. A “Finiquito” or final pay amount if the worker doesn’t “work out”  of 45 days of salary.

4. A minimum of a 50% employment tax on hirers.

Get the picture?

Now, consider this:

(Hat tip Carpe Diem Blog)

Can we see just a wee-teensy-little-mincy-kinda-sorta correlation?  We had better get some common sense back into our law crafting…after all, those kids in that chart above – they are the ones that will be paying for our Social Security!

I know we are not supposed to talk about this stuff, seeing as how it is the “Summer of Recovery” and all that, but we have had 83 bank failures YTD and there is no sign of that pace slowing.  According to the Treasury Department, at this point last year we had 40 failures on the books.

I don’t know about y’all, but I’m not sure how much more of this “recovery” I can take!