Joel Ross

As experienced deal makers, it is surely not a surprise to you that in Washington, there is always a group that says “there is no way I am voting for this unless I get what I want.” Many of the deals I have been involved in start with must haves and will never agree to's. But as often happens, wither the need or desire to get to close overwhelms the I will never. Most situations in deals or legislation have some way to compromise if the parties are intelligent and understand that is what negotiations are all about. In the end, time runs out and one party concedes the point, the other side gets fed up and walks or threatens to walk, or one party is so unreasonable that the other party really does walk away until the opposing group says OK. Legislation is no different.

So the point of this is, you need to ignore all the TV posturing of Rand Paul, and the Freedom Caucus, and Pelosi claiming “people will die.” They are just preening for the cameras and hoping to make points for the next election. If you read any of the biographies of Lyndon Johnson, you understand that the real negotiation is behind closed doors when the pressure is applied, or the Congressman is handed some project he wants to tell his constituents he got for them. There are many ways a leader can squeeze or bribe a Congressman, and get him to vote as needed despite what he says in front of cameras. So ignore all the huffing and puffing over the healthcare bill. Trump will negotiate trades to get the conservatives on board, and not to let the moderate senators have a case to vote no. Because healthcare is so all encompassing to the economy and people's personal lives, it is very emotional, and complicated to work it out in a way that is fiscally sound yet seems compassionate. Obamacare was created behind closed doors by a couple of people, so there was no open discussion, and therefore it made no sense and failed miserably. The Republican plan will at least get a thorough hearing of ideas and compromises. Trump the deal guy will get everyone on board and it will be passed.

Tax reform will then take center stage and go though the same noisy process. The democrats will claim it mainly helps the rich, and hurts the middle class. They will say that without even seeing the bill. Schumer will go on TV and whine about how it hurts this or that group, and he will do everything to stop the Republicans. Elizabeth Warren will rage for the cameras and the kiddies, and the press, as always, will attack whatever the Republicans put forward and claim it is detrimental to some poor old lady they will drag out for the cameras.

Infrastructure will be the next thing Democrats will attack as not serving the poor or whatever they will claim. The press will say contracts are going to Trump's buddies and rich developers and Wall St. No matter what the program, it will be attacked by the press and the left.

The point of all of the above is to say ignore all the noise, is only noise. Trump, to his credit, selected cabinet secretaries who are experienced deal makers, and not because they were black, Latino, gay or female. These guys all know how to get to closing. They will not stand on principal when that principal prevents a deal. They are practical, successful negotiators. They are there to efficiently run their departments and do deals. So Healthcare, tax reform, infrastructure, big increases in defense and security spending will all happen. Massive deregulation is already underway, and will accelerate. Plan for it. This means certain locations will benefit for development as infrastructure is built, areas near defense installations will benefit, interest rates will rise, but regulations and taxes will decline and offset rates rises. Dodd Frank will get modified despite Elizabeth warren who is a real nut case. There will most likely be and end to carried interest at cap gains rates, and that will hurt, but the underlying deals will benefit from the good things, so they will accelerate. All in, the economy will grow faster in 2018, and even though rates will rise faster, the benefits to CRE will materially outweigh the negatives. By 2018, growth will be there for CRE and values will again increase as the stock market continues to go up, and as confidence grows that good things will continue to happen. Just be patient and let it all play through, and wait for 2018.

The one real black swan is France and the election. While it looks now that LePen will lose to Macron in the final run, there is a chance she will win, and that will send currency markets into a tailspin. Wilders loss was not relevant since he is a real nut and fascist, who could not win. His representatives in Parliament will move things to the right. Teresa May will be very tough and there will be a hard Brexit which will encourage others to want to leave. What happens in Europe in May will impact everything you do.

The views expressed here are the author's own.

Joel Ross

As experienced deal makers, it is surely not a surprise to you that in Washington, there is always a group that says “there is no way I am voting for this unless I get what I want.” Many of the deals I have been involved in start with must haves and will never agree to's. But as often happens, wither the need or desire to get to close overwhelms the I will never. Most situations in deals or legislation have some way to compromise if the parties are intelligent and understand that is what negotiations are all about. In the end, time runs out and one party concedes the point, the other side gets fed up and walks or threatens to walk, or one party is so unreasonable that the other party really does walk away until the opposing group says OK. Legislation is no different.

So the point of this is, you need to ignore all the TV posturing of Rand Paul, and the Freedom Caucus, and Pelosi claiming “people will die.” They are just preening for the cameras and hoping to make points for the next election. If you read any of the biographies of Lyndon Johnson, you understand that the real negotiation is behind closed doors when the pressure is applied, or the Congressman is handed some project he wants to tell his constituents he got for them. There are many ways a leader can squeeze or bribe a Congressman, and get him to vote as needed despite what he says in front of cameras. So ignore all the huffing and puffing over the healthcare bill. Trump will negotiate trades to get the conservatives on board, and not to let the moderate senators have a case to vote no. Because healthcare is so all encompassing to the economy and people's personal lives, it is very emotional, and complicated to work it out in a way that is fiscally sound yet seems compassionate. Obamacare was created behind closed doors by a couple of people, so there was no open discussion, and therefore it made no sense and failed miserably. The Republican plan will at least get a thorough hearing of ideas and compromises. Trump the deal guy will get everyone on board and it will be passed.

Tax reform will then take center stage and go though the same noisy process. The democrats will claim it mainly helps the rich, and hurts the middle class. They will say that without even seeing the bill. Schumer will go on TV and whine about how it hurts this or that group, and he will do everything to stop the Republicans. Elizabeth Warren will rage for the cameras and the kiddies, and the press, as always, will attack whatever the Republicans put forward and claim it is detrimental to some poor old lady they will drag out for the cameras.

Infrastructure will be the next thing Democrats will attack as not serving the poor or whatever they will claim. The press will say contracts are going to Trump's buddies and rich developers and Wall St. No matter what the program, it will be attacked by the press and the left.

The point of all of the above is to say ignore all the noise, is only noise. Trump, to his credit, selected cabinet secretaries who are experienced deal makers, and not because they were black, Latino, gay or female. These guys all know how to get to closing. They will not stand on principal when that principal prevents a deal. They are practical, successful negotiators. They are there to efficiently run their departments and do deals. So Healthcare, tax reform, infrastructure, big increases in defense and security spending will all happen. Massive deregulation is already underway, and will accelerate. Plan for it. This means certain locations will benefit for development as infrastructure is built, areas near defense installations will benefit, interest rates will rise, but regulations and taxes will decline and offset rates rises. Dodd Frank will get modified despite Elizabeth warren who is a real nut case. There will most likely be and end to carried interest at cap gains rates, and that will hurt, but the underlying deals will benefit from the good things, so they will accelerate. All in, the economy will grow faster in 2018, and even though rates will rise faster, the benefits to CRE will materially outweigh the negatives. By 2018, growth will be there for CRE and values will again increase as the stock market continues to go up, and as confidence grows that good things will continue to happen. Just be patient and let it all play through, and wait for 2018.

The one real black swan is France and the election. While it looks now that LePen will lose to Macron in the final run, there is a chance she will win, and that will send currency markets into a tailspin. Wilders loss was not relevant since he is a real nut and fascist, who could not win. His representatives in Parliament will move things to the right. Teresa May will be very tough and there will be a hard Brexit which will encourage others to want to leave. What happens in Europe in May will impact everything you do.

The views expressed here are the author's own.

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Joel Ross

Joel Ross began his career in Wall St as an investment banker in 1965, handling corporate advisory matters for a variety of clients. During the seventies he was CEO of North American operations for a UK based conglomerate, and sat on the parent company board. In 1981, he began his own firm handling leveraged buyouts, investment banking and real estate financing. In 1984 Ross began providing investment banking services and arranging financing for real estate transactions with his own firm, Ross Properties, Inc. In 1993 Ross and a partner, Lexington Mortgage, created the first Wall St hotel CMBS program in conjunction with Nomura. They went on to develop a similar CMBS program for another major Wall St investment bank and for five leading hotel companies. Lexington, in partnership with Mr. Ross established a hotel mortgage bank table funded by an investment bank, and making all CMBS hotel loans on their behalf. In 1999 he formed Citadel Realty Advisors as a successor to Ross Properties Corp., focusing on real estate investment banking in the US, UK and Paris. He has closed over $3.0 billion of financings for office, hotel, retail, land and multifamily projects. Ross is also a founder of Market Street Investors, a brownfield land development company, and has been involved in the acquisition of notes on defaulted loans and various REO assets in conjunction with several major investors. Ross was an adjunct professor in the graduate program at the NYU Hotel School. He is a member of Urban Land Institute and was a member of the leadership of his ULI council. In 1999, he conceived and co-authored with PricewaterhouseCoopers, the Hotel Mortgage Performance Report, a major study of hotel mortgage default rates.

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