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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (237688)	2/5/2010 12:46:42 PM
From: Perspective	Read Replies (1) \| Respond to of 306849

Thank you for the insight. So, in good times, everybody gets stronger. Then in bad times, the strong get stronger at the expense of the weak. I guess that fits with experience. So the only time the oligopolies get hurt in CRE are when rates rise? (Or if there's a general market panic, as we saw a year ago.) I still don't understand why they get to act as if they are exempt from the effects of depreciation now that the secular RE bull is over, but maybe I'm just dense. Those buildings don't come for free, and my experience has been that they don't have very long useful lives. `BC

To: John Vosilla who wrote (237688)	2/6/2010 2:02:57 AM
From: Perspective	Respond to of 306849

It still bugs the hell out of me that they get to pretend net income doesn't matter. Depreciation doesn't matter. The buildings come for free! <S> Perhaps they did when there was a real estate bull market but that time is over. Real estate, especially commercial, is a depreciating asset with limited lifespan and to ignore the cost of the buildings is ignorant. Where else do they get away with waving their magic wand and adding an amount that is BIGGER than net income back in because "it's a noncash charge"? finance.yahoo.com Note the depreciation charge backed out for FFO computation: The following table provides the reconciliation of the range of estimated diluted net income available to common stockholders per share to estimated diluted FFO per share. For the year ending December 31, 2010 ------------------------------------- Low High End End --- --- Estimated diluted net income available to common stockholders per share $2.58 $2.73 ***Depreciation and amortization including the Company's share of joint ventures 3.57 3.57 Sale of interest in Simon Ivanhoe (0.85) (0.85) Impact of additional dilutive securities (0.05) (0.05) ---- ---- Estimated diluted FFO per share $5.25 $5.40 Charge in connection with January 2010 tender offer 0.47 0.47 ---- ---- Estimated diluted FFO per share as adjusted $5.72 $5.87 ===== ===== `BC