[Dan Herrmann]

Dan, where do you live exactly again?  I think you might have told me once, but I forget.  My inlaws in the Reading area live near the Wyomissing Mall, near Wilson High School.

I live in West Pikeland Twp in Chester County.  Post office is Chester Springs.

And I now think the subprime "crisis" has morphed into a liquidity "crisis".  

[SB]

Steve has hit the nail on the head in that the entire lending industry is tightening. Lenders are requiring more equity in deals. Higher rates translate into larger monthly mortgage payments and lower cash flow. Marginal deals cannot be financed. New course construction may be put on hold for a while.

Rob, I'd still give you money for a marginal deal.  

[Powell Arms]

And yes, most of this is self-fulfilling, and if the news told us that times were good, e.g. effective full employement, much of this crisis would vanish.

This I can't see.  Banks and others gave mortgages to people who never should have qualified for them.  No matter how good the news is, those people cannot pay back the billions they borrowed.  

Tip of the iceberg, too.  

In the macro sense, certainly not for the individual with a mortgage they cannot afford.  But clearly, home prices were propped up by widening the pool of buyers, and one way in which that was done was to create mortgages that allowed people to "afford" homes that they otherwise could not.  Absent those products, the home prices would not have been at the level they were at, and those same people probably could have afforded the rational price for the home.  For the lender, this probably translates to a workout, and not a foreclosure.  It's a system wide problem, and no lender wants to own a huge inventory of overpriced homes.  

My point in the prior post was more that people were not losing jobs.

[Rob_Waldron]

Scott

I know you would lend me the money. My concern is the rate and LTV requirements.

[Richard Choi]

Question:

Will this credit crunch have any effects on high profile golf projects (that have not begun) like the Tiger's course on Cliffs?

Or is he too high profiled to have this affect his project?

[Powell Arms]

Question:

Will this credit crunch have any effects on high profile golf projects (that have not begun) like the Tiger's course on Cliffs?

Or is he too high profiled to have this affect his project?

In Tiger's case, that depends if he has a financial interest in the development or if he is only the designer.  If he has a financial interest in the development, I doubt he would allow the project to fail.  Although the cost to borrow will be higher, I do not imagine he would want to either write off pursuit costs or have his imagine tarnished.  If he is the designer, then he really does not have a say as to whether the project moves forward or not.  

[Tom_Doak]

Often the most well funded projects are the first to stop when something like this happens.  They are financially sound and they can afford to be conservative and wait and see what happens before starting to build a course.  

I saw this in 2001 -- our best-funded clients sat on their hands and waited to see how it would shake out, while the underfunded clients who could scrape the money together to start, did.

However, if the latter type of clients are looking for any sort of debt financing to make it happen, I think they can forget it for a couple of years.

[Bob_Huntley]

Bob Huntley...be careful with the Apt REITs..they are already very fully priced and trade at very low cap rate related prices, thus not quite as defensive a play going forward as they might have been 6-8 mos ago.

Steve,

Thank you for a most comprehensive review of the situation, it is well thought out and presented.

As for the REITs, I do not go into this dark night unprepared.

Bob

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