Daily Archives: June 22, 2009
If your company loses money and only took in $25 million in new cash this year, how much should you pay yourself for your performance? If you’re Mario, a whole bunch. From Dealbreaker:
In the latest issue of Crain’s Aaron Elstein examines the massive package of Mario Gabelli. Last year’s paycheck ($46 million) was bigger than that of Lloyd Blankfein and John Mack combined and more than twice the size of Larry Fink’s take-home. We’d advise you to not even entertain the thought of making comparisons, though, which Big G says are baseless crap (or bringing up the fact that the firm only took in $25 million in 2009). Plus, he’s got an explanation for it all that will just make you look like an idiot and him look like a guy on ‘roids.
Mr. Gabelli makes no apologies. The Bronx native says comparing his pay to Mr. Fink’s is “bull,” because while other CEOs dedicate their time to strategic and administrative matters, Mr. Gabelli still gets his hands dirty researching stocks and wooing clients to the firm he started in 1977.”If A-Rod was managing the Yankees, he’d get $2 million a year,” Mr. Gabelli argues. “But he’s a player, so he gets more.”
He adds that 98% of shareholder votes were cast in approval when his compensation package was last voted on two years ago. What Mr. Gabelli doesn’t say is the outcome was never in doubt: He controls 95% of his company’s voting stock.
Other things you should consider not bringing up are pay cuts some of Gabs’ staff was forced to take, or the layoffs wherein a gaggle of Gamco-ers apparently only got two weeks severance. Probably safe to mention (like in an interview or something) is son (and employee) Matt, who’s been seeing a stripper from Beamers, Stamford’s premier topless bar, and recently escorted her to his brother’s wedding. Could be a source of fatherly pride or some such. I don’t know, I’m just trying to get you a little career advancement.
That’s a long time. The Wall Street Journal reports that commercial real estate fell 8.6% in just April alone while in Boston, they’re expecting a tsunami to wipe out anyone who bought in the past few years.
Good thing the Antares boys were wiped out last year or this would be painful to watch.
What is it about Cos Cob that people don’t like? It has an excellent elementary school and Central Middle School is appreciated by the parents of its students, it’s close to the beach and central Greenwich, there’s a nice shopping district (albeit one without a grocery store – thanks, Jerry) and the yards tend to be much bigger than comparable houses in Riverside or Old Greenwich. Yet some newcomers go ballistic when they discover that mail addressed to Greenwich with a Cos Cob zip will be returned by the Post Office, Riverside Yacht Club members universally paint “Riverside” as their home port even though they sail from Cos Cob Harbor (one brave friend, Bill Breck, defied that tradition, but he’s now dead. Coincidence? I think not) and many, many buyers refuse to even look at a listing if it’s in Cos Cob. So what gives? I don’t know.
But, prodded by a comment from Stanwich, I just pulled up the sales history for that section of town to see whether my memory about low pricing was correct. It was. There has been exactly one sale for more than $5,000,000 in the history of Cos Cob: 200 Cognewaugh, $5.250, in 2007, and I doubt it would fetch that now. There have been no sales, ever, in the $4.5 – $5 million range, one sale at $4.295 (2005) and three other sales in the low 4s ($4.000, 4.050, and $4.175), and that’s it. Period.
I like Cos Cob, I’ve sold a lovely house on Cat Rock in Cos Cob and I’ve recommended scores more homes, to no avail. So Stanwich, you can take me to task for disrespecting Cos Cob, but the fault lies in the buyers, not me. By the way, fella – isn’t Stanwich in Greenwich proper?
When 45 Baldwin Farms South was first listed in January, 2008, the broker suggested a price of $9.750. Eventually the out-of-town builder figured out he wasn’t being helped by that price and he changed brokers and whacked a few million off the price. But the damage had been done, and the house continues to sit. Today he hit it again and its down now to $5.495 or just 56% of that first price. Of course, since the house was never going to sell at that first price, we’re not really seeing a reduction of 44% here but still, it’s significant. Objections I’ve heard from clients I’ve shown it to include its being a back-lot down a long driveway, an odd layout (which I rather like, but I’m not planning to live there) and no back yard, at all. Instead of a yard, it has a pond but there is no dock from which to enjoy that pond and, inland wetlands being who they are, probably no chance of getting one. So you can launch a canoe, you’ll just have to wade through muck to do so.
So who is the market for this very large (9,000 sq.ft.) house? A family with kids will want a play area and the scrap of a side yard here won’t accommodate one. Parents with very small toddlers may not need a big yard, yet, but will fret about the water and a couple with grown kids or no children at all won’t need 9,000 square feet. I am beginning to wonder, as this house refuses to sell, whether it’s not too much house on too restricted a lot. That would be a shame, because it’s well-built, and a lot of care was lavished on its construction. Perhaps not enough care was spent deciding to build it here in the first place, though.
Faced with what some people might think was a rather large problem – a budget deficit of a $ billion + and climbing, our Legislature has decided to punt and won’t address the budget this session. It has, however, cut spending for LifeStar helicopters that transport sick people to hospitals and voted to force Connecticut and municipalities to build new bicycle paths. “Hell,” said the Walter Stumpf, Democratic Head of Household Spending, “someone gets sick, we’ll just dump him on Frank Bloomer’s bike and let the old guy take him in. But how’s Franklin gonna get to the hospital without a bike path, eh? Answer me that!”
Stumpf promised to reconvene the Legislature in August, “so we can write up some whup-ass for you Greenwich folks. We ain’t worried ’bout no budget deficit when there’s Greenwich to tax. Sooeee!”
This spectacular failure of a spec house has a history that just gets more interesting by the day. Originally priced at more than $9 million, its builder turned down $7 million a year ago January and was forced to sell it for $4.5 million last August. The new owners, convinced they had a bargain, turned it around, jacked up the price $800,000 to $5.3 million and, I am informed by their lender, promptly defaulted on the loan. The lender dumped their loan two weeks ago refused to consider our offer just this morning, claiming that it had sold off the loan at a discount two weeks ago. Yet now the house is under contract under an instrument dated June 22! Wow, that was fast!. So who’s the buyer, who’s the seller, and what’s the price? If it’s around $1.750, won’t that be a surprising comp.? If it’s close to asking price, didn’t someone just make a very quick, very tidy profit? Stay tuned.
Two more contracts from Friday reported today. 2 Pleasant Street in Cos Cob, purchased for $905,000 in August, 2005, listed for $879,000 just last month and has found a buyer.
186 Otter Rock, a 1953 house on and acre and a half, was originally listed for $5.7 million on August 14, 2007 and stayed with the same broker through the years as it slowly dropped to $4.975 million. The seller’s patience has been rewarded – an agent with the same broker has the buyer, lucky for the broker (2X the commission) but my math on how long this process took is different than that employed by the Greenwich Association of Realtors. They show an original listing price of $4.975 and only 98 days on market while I see $5.7 million and 675 days. But I’m just an old spoilsport for mentioning that. Perhaps the grievance committee will raise that issue, too because my method really screws up their rosy statistics on DOM and sales-to-ask percentage. Darn him!
As mentioned last week, the Pecora Brother’s spec job at 137 Cat Rock has gone to contract, somewhere below its last asking price of $4.195 (I’d bet around $3.8 million, but what do I know?). That’s a pile of money for Cos Cob and this street, but still a fair distance from its original ask of $5.5 million. If, for the sake of argument, the building loan on this was $3 million, and the builder spent a million of his own servicing that loan all these years and doing the massive landscape job that turned swamp and ledge to yard (even if that yard is now dying), then too many deals like this and they won’t be around much longer.
Didn’t I read about some TV show depicting her death a month or two ago? So what’s up with this?
Farah Fawcett back in hospital and “not doing well“. I wouldn’t think so.
No action at all today (the earlier flurry was generated Friday) but lots of price reductions. 8 Round Hill Road, 2.39 acre, good address, okay house, has dropped from $3.6 million to $2.795. 70% assessment says $2.541. Makes me wonder whether it might have sold awhile ago had it started here, rather than end up, perhaps for a pause, at this level.
20 Dingletown continues to struggle. This house was completed in 2006, priced at $5.395 million that year and now, three years on, is down to $3.895. I’m pretty sure the construction loan is in the mid-fours, so I feel for the builders and I understand their method of slicing their wrists in small, $100,000 increments. But maybe those musslemen are onto something – one swipe of the sword lops off the hand and the poor bugger gets on with his life.
Citigroup Property Investors CEO Roger Orf has clearly not read the toxic asset playbook. If he had, he’d know that the game plan for dealing with toxic real estate assets is to create a series of proposals designed to distract people for a couple months while waiting for your deity of choice to deliver a property valuation miracle that makes parting the Red Sea look like a cereal box magic trick. Instead, Orf wants governments to force bailed out banks to sell toxic real estate assets through a hallmark Citi strategy.
“I personally feel the best way to do that is through creative destruction as opposed to a malaise where you let the air out of the tire over a number of few years”
On a lesser scale, that’s what’s happening here in Greenwich, with banks sitting on non=performing assets and rolling over the due dates rather than foreclose and take the hit. Now, if a loan hasn’t been paid on in over a year and the asset securing it is depreciatig at least 20% a year, do you think that tacking a penalty interest of 9 1/2 % on the end of the loan will help? Neither do the banks, but they’re stalling for time.
Or, in the case of a local bank I mentioned earlier today, are they scrambling to find friends who will take on the loans and, possibly, take care of the bankers when their old job vanishes? Just wondering.
Robert Jaffe has been sued for fraud by the SEC. “Bob” is the son-in-law of Carl Shapiro, the 96-year-old philanthropist who first started Bernie on his way in the 60s, made millions with him and, until recently, was depicted as Bernie’s last victim because he wired $400,000 to Madoff to keep the firm afloat. Now’s there’s some thought that Carl was in on the whole scam and sent the money in to preserve his good name, rather than to help his god friend Bernie. Whatever, perhaps his son in law will rat him out to shorten his own jail sentence.
Our local paper of record, Greenwich Time, reports that Greenwich resident Diana Ross was actually seen checking out a book at Greenwich Library! With insider – access to this kind of earth-shaking scoop it’s no wonder the paper just raised its cover price. I mean, where else can you find news that matters, news that will affect your life? No word yet on the identity of the poor Stanwich Road man who committed suicide eight days ago, but frankly, even I can see the insignificance of that to all but the immediate family. Still, don’t we report police matters any more?
Just learned that a local bank was busy unloading its failed commercial loans, originally extended to Greenwich spec builders, for pennies on the dollar last week. That same bank has now received a cease and desist letter from the FDIC so it can’t do that any more but, since these loans aren’t current and in fact aren’t paying anything, how long before the new note holders exercise the confessions of judgment signed by the builders and dump them, and their houses, on the street? For that matter, how long before the bank itself is shut down? These thigs happen on Fridays. This Friday is the last one in June, if you care to set your watch.
Why is Habitat for Humanity still building houses? Clusterstock links to a story in Florida – Florida!– about Habitat for Humanity announcing plans to build a new subdivision, half for profit, the other half subsidized. Talk about mission creep. Just as MADD has branched into the Temperance movement now that its initial goal of draconian drunk driving laws has been accomplished, Habitat is scurrying around trying to find a new purpose with which to keep Jimmy and Roslyn Carter occupied on their volunteer weekends. My own kids have participated in this program and it’s great – nothing better than lending a helping hand. But right now, if the goal is to provide housing for po’ folk, especially in Florida, the inventory is there already. All you have to do is get there before the bulldozers do.
When Heineken moved its CEO (for America) back to the home country in 2007, it listed his huse for $3.9 million and sold it that April for $3.1 to a local resident of Taconic Road. She made very quick work of “renovating” it and returned it to the market four months later for $4.595 million. Even in 2007, that was a bit much for the house and so it’s sat unsold ever since. through a couple of different brokers and a few price changes. Today it was withdrawn. Lat asking price was $3.795 and I’m curious to see where it returns.
Well, sort of. The would-be seller of a Greenwich house has filed an ethics complaint against me alleging that I was mean to him (I’m looking into whether there is any sort of confidentiality provision afforded claimants by our Board’s rules and if not, I’ll post the complaint here). I question the angry owner’s standing to file such a complaint, and the applicability of the ethics code to a broker/agent – customer relationship that doesn’t exist, but I suppose this was inevitable. When someone’s facing foreclosure, can’t sell his house and has nothing but doom looking him in the face, it’s just human (and cornered rat) nature to lash out at anyone handy.
If the owner were still capable of rational thought, he’d realize that my mention of his house in June of this year has nothing to do with the failure to sell the property over the past four years. Nothing. But I suspect that capability vanished long ago.
I will of course keep readers posted on developments.