Recently, we hear no end of the landrush for finished lots. Builder magazine senior editor John Caulfield yesterday reported on the phenomenon we caught wind of here in late May and early June.

Big Builder editor Sarah Yaussi wondered aloud about what real factors might be at work to account for such a rabid pursuit of finished lots right now, when housing demand drivers continue to be so challenging in these very markets.

Our guest guru Jamie Pirrello offered insight from a home building company executive’s viewpoint in his blog a couple of weeks ago.

Fact is, we need lots. We’ve depleted our finished lot supply in our best-selling communities. While we have access to land development financing, it is limited. Securing additional land development financing will be on terms we can’t justify. So while we can develop some lots, we need to buy finished lots to meet expected 2010 demand. If not, we will not be able to continue our year-over-year growth for a third year running. We could even see a volume decline.

Also, we’ve got lots of company, public and private. Everybody wants lots on “soft” terms with low deposits and a minimum takedown schedule. As long as buyers manage deposit and takedown risk, they’re actually willing to push prices higher. Lots that weren’t even in play are now gaining attention of multiple buyers. Yet, we have no pricing power with our customers; we can’t raise prices to cover increased lot prices. How much of our already limited margin can we afford to forfeit?

Still, even as the demand for finished lots surges, we believe it’s incorrect to conclude that home building executives believe that positive momentum is gaining much traction. It should be noted that the gold standard for measuring home builder executive sentiment, the National Association of Home Builders’ HMI last measured 17. Now 17 is high compared with where it was in January, but since any number below 50 means that the majority of executives are pessimistic about the outlook, 17 is still pretty darned negative.

On the contrary, we feel the motivation to buy land right now is the opposite. Home builders, deep in their natures, are glass-is-half-full types of people. But they’re not deluded, and they’ve lived with reality for a long enough stretch now that they’re not suddenly caving to visions of grandure about a snap-back.

Oversimplistically, we sense that the lion’s share of the action in the land market right now reflects a dash toward cash for the near term, and signals desperation on the part of more home builders than not.

As one knowledgeable industry observer put it yesterday, “the publics have been losing money [with the exception of NVR] quarter after quarter now, and they’re doing whatever they can to have a profitable earnings period, which probably won’t happen in 2010.”

So, what we believe is that as much as home building executives believe in the power of positive thinking, they’re, in fact, anticipating a really rough go of it in 2010. Cash, however it can be secured, is going to continue to mean life for death for those who drive value to stakeholders by building new homes for American Dreamers.

We linked above to Dan Ariely, whose “Predictably Irrational” remains a dependable source of sanity and insight in these challenging times. Here’s part of what he says about optimism that speaks to the plight of home builders.

It is interesting to ponder the utility of over-optimism. It’s not a simple matter, because it can both hurt and help us. Individuals often suffer because of an overly bright outlook. They wind up dead, or poor, or bankrupt because they underestimated the downside of taking a certain path. But society as a whole often benefits from behavior spurred by upbeat outlooks.

So, it’s a thin line between being upbeat and being realistic. Chief financial officers tend to demand realism foremost. So how will home builders budget for 2010, flat or up?

Everybody who’s been through them knows it’s different than that. Bob Toll, Toll Brothers’ patriarch and CEO, has put it this way:

“Somebody gets up on a Saturday or Sunday morning and decides it’s a good day to buy a house, and a reporter for the New York Times finds out and reports in a Monday headline that it’s a good time to buy a house.”

It has gone like that enough times that veterans of residential development and home building swear that’s what happens.

In an isolated number of markets–including ones that were doing nothing good six months ago–people are starting to say, “the light’s back on.”

Here’s a note from the Orange County Register’s real estate writer Marilyn Kalfus.

“Orange County is continually trending to inch up month over month,” said Kristine Thalman, CEO for the Orange County chapter of the California Building Industry Association.

She said the $10,000 tax credit for new home buyers is continuing to spur demand since it went into effect in March.

“As one of my builders called it, somebody turned the light on,” she said.

Statewide, builders pulled permits for 2,203 single-family homes in May, down 7 percent from April but 40 percent lower than in May 2008. On a seasonally adjusted basis, CIRB reported that May’s figures were down just 1.6 percent compared to April.

“This is very good news,” said Robert Rivinius, the California Building Industry Associaton’s president and CEO. “As this continued strength in new-home construction shows, the credit is indeed working.”

The Franchise Tax Board has reported that nearly all of the $100 million for the program is spent. The homebuilding industry is trying to get it extended.

Based on the strength in the single-family market, CIRB for the first time this year has adjusted its annual forecast upward this month. The Board now expects single-family housing starts to total 24,900 and total housing starts to be 40,200 for the year.

Those familiar with the plotline of housing downturns know that recovery isn’t a single event, but a process. It’s the light going back on in multiple markets, when enough prospective buyers believe that the market has made enough prospective sellers capitulate.

The constant flow of policy has slowed down and added complexity to the process. Big, noteworthy players have capitulated, but only in isolated instances. The heavy hand of a corrective market has not driven enough property holders to their knees for potential buyers to believe their moment has come.

The policy game has favored sitting tight in hopes of some form of bail out as opposed to cutting one’s losses and moving on. That’s probably why the bottom, so to speak, is proving to be elusive.

During the back half of 2008, bank land asset portfolios became enmired in the broader toxic asset seize-up that remains an 800-lb. gorilla in the financial system’s living room, and the global destruction of value declawed many of the vultures. What’s more, pro land sellers are not ones to roll over and die just because it’s the toughest real estate marketplace since the Great Depression.

A much-anticipated reset of lot prices from a dollar to cents-on-a-dollar became a full-fledged standoff. So far, while all eyes are on Lehman-SunCal and LandSource’s Newhall Ranch as potential game-changing revaluations, a broad-based lot re-pricing has been slow to arrive to the market.

Still, it seems that where opportunities are cropping up as an exception to the rule, it’s not vulture funds but real live home builders who are jumping in to snatch them up.

In a post yesterday, we talked here–”Home Builders Join in Renewed Pursuit of Land”–about home builders positively teeming on bids for prime-location, finished lots in the Phoenix market.

We also hinted in an earlier post that we’d start reporting word of as many “start-ups as shut-downs.”

This morning, we received this press announcement:

IRVINE, Calif. – June 12, 2009 – Is a recession the right time to build new homes? According to Trumark Companies it is. The 20-year land development company that designs and entitles quality residential neighborhoods and builds office, R&D and retail properties is taking advantage of the market downturn to launch Trumark Homes – a homebuilding company unencumbered by the financial challenges faced by existing builders.

Trumark Homes recently acquired 4.38 acres of land in the Inland Empire community of Upland, Calif. The homebuilding company will develop Wyeth Cove, 39 single-family courtyard homes ranging in size from approximately 1,717 to 2,401 square feet. Construction is set to commence in August 2009; opening date as early as 2010.

“We will be the new generation of home builders who are responsive, focused and unburdened by legacy issues, large bureaucratic systems or broken projects,” said Michael Maples, principal of Trumark Homes and co-founder of Trumark Companies. “Our strategy is to leverage our real estate knowledge and expertise to build a large West Coast homebuilding company targeting both Northern and Southern California markets, initially targeting the distressed market niche.”

Those who know and played the Resolution Trust Corp. game in the early 1990s are excited right now. They look at the vultures and see a possibility for a light poultry-like lunch.

“In the past four to six weeks, we’ve seen a sea change,” said the CEO of a leading publicly-traded home building company. “Until then, most of the interest in lots was coming from financial investor players. Now it’s home builders. There’s eight or 10 home builders aggressively in the lot market right now.”

Investment “land opportunity funds” have been trolling the residential landscape all along, trying to snap up prized lots for a song. But as the global credit crisis unfolded, many of these vulture funds either went dark or remained on the sidelines, not knowing when to pounce.

Meanwhile, home builders were scarcely able to underwrite new land acquisition, given that their balance sheets needed every bit of cash in the event of another year of sales paralysis. What’s occurred in the past few months is that everybody’s witnessed that if prospective buyers are given enough incentives, a healthy complement of them will show up looking to buy.

Home builders who’ve pursued an asset-light land strategy have actually done well enough at working through their dirt inventory since the turn of the new year to reach a point where they need to replenish.

Other builders may not be so fortunate, but still need land. They need land that’s less expensive than the stock of lots they’ve got so that they can bring more affordable home communities to market during the earlier stages of a housing recovery. So these companies represent as urgent a demand for cheaper lots as those who are running low on lots.

All told, the strategic demand for lots from builders is putting pressure on land prices, even before they settle at the low cents-on-a-dollar level that many expected they would. Experts who are involved in land deals nationally estimate that prices for lots have reverted to about 2002 prices, which is a higher number than many would have guessed a few months ago.

“Where we thought we’d be paying $35,000 a lot, we’re paying more like $45,000,” the head of one large national home builder said.  “Prices didn’t come down as far as we thought because there are more builder buyers for these lots than we thought there’d be.”

Two of real estate’s most vaunted new-home residential development entities–LandSource/Newhall Ranch & Farm and what is known as the Lehman Brothers’ SunCal–are still considered bellwethers for resetting land prices. But they’re currently slogging through complex and drawn out bankruptcy proceedings.

Word from the field is that the most exuberant land aquisition market right now is Phoenix, but that California (excluding Southern California) and Texas have also seen the reemergence of home builder buyers for residential lots.

But business plans and unpredictability don’t go together somehow. So what do you do?

Bet as Pulte CEO Richard Dugas did, on entry level and first-time home buyers. The big question is, will Centex’s kind of entry level and first-time home buyer product fit the near-term urgency bill or not. The race now is for real cash generation. At the end of the day, when they’ve taken all the cost of people, competitive cost and systems redundancy out, will Pulte-Centex be able to meet the biggest challenge of the moment, which is to get people a new-home offering that they can’t resist.

We think the philosophy’s right. But, we’d question the ability to execute. As a matter of fact, just as the government is looking under the hood of the banks, and in some cases is not liking what it sees, we’d say that most home builders who’re planning to stick around had better figure out how to get first-time buyers into their stable soon.

First a few dots that may seem random. Then, how they connect.

Let us know if this litany makes any sense to you in the next 300 words or so. Stress Test. Under water homeowners. Recovery. Walkable urbanism. High volume home builder strategy.

This afternoon at 5 pm EDT, the Federal Reserve Board will release the results of its Stress Test of the nation’s 19 largest banks. The Stress Test is called the Supervisory Capital Assessment Program, and it’s the government’s attempt to learn whether banks–and, more broadly, the private sector financial system–have enough capital to cover their losses if things go as wrong as government theorists and their trusted advisors assume they can go.

The arguable issue is whether the Stress Test tests the real life stress that could occur or not. New York University economist Nouriel Roubini asserts the stress test is not a valid reflection of real risk and real exposure of bank capital to further dramatic dislocation.

Here’s a CNBC clip of Roubini on the topic.

Whether or not you agree with Roubini may reflect how confident you are about the one-in-five home mortgage borrowers who are now said to be under water on their loans. The facts of negative equity and the theories about negative equity’s direct impact on loan defaults are roiling beneath federal bank supervisors’ assumptions at work in the Stress Test.

We can guess that people who are far under water on their home loan and undergo new challenges to their ability to make monthly payments will be most likely to default. Those who can continue to pay, but who realize they’re paying into the vat of home value deflation, we can only guess.

What we do know is that home prices are still falling and that the job and income baselines that they may need to correct to are challenged. This means that home equity, in more cases than usual, won’t be able to serve as viable currency in near term future purchases of homes. Hard cash, 20% or more in most cases, will be what it takes to buy a home, period.

This observation on residential “demand” from Todd Sullivan’s Value Plays blog:

Here is the dilemma. Falling home prices are making homes more affordable, of that there is no argument. The problem is that falling home prices also sap equity from those sellers looking to use it to afford the next purchase. When you add tighter lending and higher down payment requirements you further restrict demand as you eliminate more marginal buyers from the pool.

Contingency sales are highly challenged. Stated income purchase loans, even for professionals, are also highly challenged. The mid-to high end for production homes, and the 55+ category of active adult communities will also be highly challenged.

Why? If you can’t roll your home’s equity into that dream home, an American economic juggernaut in cars, appliances, furnishings, service companies, landscaping, etc. makes a screeching sound.

That’s the kind of Stress Test Roubini’s talking about.

The Stress Test for home builders, we think, is can they leverage their current capital structure to make new homes available to people approved under FHA, and to some with 20% down who can make monthly payments of $850 to $1300? But here’s the twist.

This can not rely entirely on swapping out land they overpaid for for land they’ll get on the cheap out in the exurbs. They have to be able to crack the code of bringing their skills of construction, engineering, financial management, community relations, and marketing into the urban core.

Here’s Nobel prize-winning economist Paul Krugman in the New York Times:

He’s in “the kind of neighborhood in which people don’t have to drive a lot, but it’s also a kind of neighborhood that barely exists in America, even in big metropolitan areas. Greater Atlanta has roughly the same population as Greater Berlin — but Berlin is a city of trains, buses and bikes, while Atlanta is a city of cars, cars and cars.

And in the face of rising oil prices, which have left many Americans stranded in suburbia — utterly dependent on their cars, yet having a hard time affording gas — it’s starting to look as if Berlin had the better idea. “

Cheap energy is gone. The fossil fuel based economy is winding down. Communities that rely excessively on car travel are a limited opportunity, even for home builders that made a living building the surburbs.

Where there is excess capacity in home building is in the suburbs and exurbs. Where there is a need for what production home builders could do is downtown and near downtown. Right now, it’s more expensive, more risky, more time-consuming, more capital intensive, and more technically difficult to do it.

Brookings Institution’s Christopher Leinberger has written:

• Real estate and infrastructure, including government buildings, accounts for 35% of wealth in the US and is the largest asset class in the economy.
• There are only two options for real estate development and the built environment (drivable sub-urbanism and walkable urbanism).
• Drivable sub-urbanism has been the defacto domestic policy of the country since the 1950s.
• Growing demand for walkable urbanism has resulted in a large gap between the current limited supply and much larger pent-up demand, boosting per square foot premiums for walkable urban residential, office and retail space from 40 to 200 percent.
• More than 80 percent of recent residents in downtown Philadelphia and Detroit are college educated.
• Recent research in selected metropolitan areas shows that 30 to 40 percent of households want to live in walkable urban communities, but only 5 to 20 percent of the housing supply is in that category.

But over time, it’s more valuable and can sustain a more predictable future. Who wouldn’t want that right now?

The shoots may be green. The signs may be less worse. The upticks may be cropping up here and there. Fact is, most brutally realistic people–whether or not they have economics degrees–say that historically, trends revisit and retest their low points at least once before they get done forcing most players into capitulation. And most players need to descend into wrist-slitting capitulation before a business environment can restore willing buyers and sellers to the game of making a market.

Your next 100 or 1,000 home sales will each be at the expense of competition from used homes, from foreclosure sales, or from new-home competitors. Whatever the condition of your balance sheet today, you’re not going to make it if you can’t get some sales; and you’re only going to get sales if you beat somebody else to them.

No two ways around that. Consolidation in industries is not fair and balanced. Whose company survives to tell the tale of 2007 through 2010 will have nothing to do with having been better or more compassionate home builders. It will have everything to do with simply being a survivor. Suffice to say, it will take luck, but, too, you’ve got to be good to be lucky.

A threat to be lost amid the furor of the global credit and economic crisis are some simple levels of accountability that production home builders share in what led to housing’s Waterloo. Although those who endure the challenges of a 100-year storm battering the system may have grown comfortable with “taking a haircut” on their holdings, you still don’t hear of a lot of people talking about radical changes to their system.

Tad Leithead, a senior VP for Cousins Property Development in Atlanta, talked two weeks ago at the Urban Land Institute spring meeting about dramatic structural changes that would have come due whether or not the economy fell off a cliff two years ago.

To describe the changes, the raw material of his metaphor came from fast cars and faster jets. Leithead says, “we’ve gotten to be very good at a couple of things, like NASCAR drivers. They drive straight and then turn left at an average speed of 190 miles an hour. That’s what we’ve been like in housing. ”

The moment calls for something else. Careering at 200 mph on a straight and turning left is nothing compared to the complexity of dealing with today’s environment, Leithead says. “Today, it’s more like landing an SST with no control tower, and thirty other SSTs either landing or taking off at the same time in the same airspace.”

That’s complicated.

Here are some structural questions the moment begs to be addressed and resolved sooner than later while the ills of the broader economy still provide home builders a modicum of camouflage:

• Can public home builders turn into better, more transparent inventory managers to yield investors a clearer sense of their business across cycles?
• Will production home builders find a way to crack the code of building profitably “closer in” to metropolitan and employment centers, as opposed to more and more distant green field communities?
• Will buying scale ever mean more than national purchasing contracts in a dozen or so materials and product categories?
• Will home building company leaders recognize in time that the two most compelling prospect pools of the next 10 years–Generation Y and the Baby Boom–will not be interested in the product lines that are currently being offered?
• Will private home builders ever be able to turn their entrepreneurial edge and home court knowledge into greater leverage with capital sources?

They’ve toiled long and burnt the midnight oil to bring audiences something bright and new–a sign of their redoubled intent to be the first, best source of insight on the multifamily housing management, economics, and leadership.

Here’s the topline thought on the new multifamilyexecutive.com Web site from the brand’s primary steward, editor-in-chief Shabnam Mogharabi.

But first a look at the fresh new design of mfe.com. Have a visit.

Click image for access to Multifamilyexecutive.com

Here’s how Mogharabi describes the new features and functions.

>> Real-Time Data and Research As mentioned above, our senior editor Les Shaver leveraged MFE’s strong relationships with the industry’s leading research firms to provide something no other multifamily industry publication can offer: Up-to-the-minute, real-time national and regional market research. Throughout the site, you’ll find built-in widgets from Real Capital Analytics, M/PF Yieldstar, and others that provide customizable, searchable data on occupancy and vacancy levels, transaction volumes, rent trends, and more. In addition, the new site features a live stock ticker with continuously updating information on publicly traded multifamily real estate companies.

>> Multimedia-Rich Experience With the re-launch, we are now able to offer enhanced multimedia offerings and interactive features such as slideshows, polls, and Webinars. We also have, through our newly launched MFETV platform, four new videos up on the site, including a 20-minute sit-down interview with Henry Cisneros conducted at the AFT Conference last month.

>> Local and Regional Coverage Since multifamily real estate is very much a local game, it was important for us to be able to have some locally focused content. We were able to modify a Flash-based map created for Remodeling’s Web site and modify it to link to lists of MFE articles about specific markets, both at the local and state level. This was a temporary solution that I think works well for us until we are able to build more targeted local markets pages.

 >> MFE Top 50 Rankings Our annual industry benchmark—the list of MFE’s Top 50 Owners, Managers, and Developers—is now viewable in a user-friendly table format that allows for a quick scan to find the company or information needed from any year in which the survey was conducted. And the data can be downloaded into an Excel spreadsheet for easy reference.

 >> Daily Exclusive News / Content Aggregation Our vision for MFE.com was to be news-heavy and a destination site for the industry. To do so, we needed to be able to offer folks in the multifamily industry everything they would need in one place. The site is rich with daily Web-exclusive news, features, and stories from MFE, each with its own RSS feed. But in addition to that, we have made a point of offering more aggregated news coverage from around the Web and article feeds than any other publication in the industry. Stories from every industry resource on the Web—including our competitors, national trade associations, and commercial news vehicles such as the Wall Street Journal—can be found on MFE.com. In addition, we offer links to industry blogs, calculators, resource centers, lists, and more.

 >> Expert Opinions We have begun to cultivate a blogroll that includes perspectives and opinions from the editors of Multifamily Executive as well as multifamily real estate experts. Over the course of the next few months, we will be bringing together more than a dozen multifamily experts, architects, and consultants to share their insights on the site. 

  >> Streamlined Design and Navigation With the re-launch of the site, we have updated our color scheme and style. The sleeker, streamlined design allows users to easily locate the right content. And we developed a topic-driven navigation structure that focuses on vital areas of the multifamily real estate business with less of a focus on the magazine product itself.

We congratulate the team that brings you this Site, and we wish them all good luck as they work to bring you the smartest, best, and first intelligence on multifamily housing business and management!

“We’re here to stay.”

 When he says it, it’s certainly about selling new-homes to people who want or need them, with a solid name in the community to back up the promise. It’s a way of expressing the belief that real estate–and home building–is local. If prospective home buyers view you as part of the community, and they know where  you live, doesn’t it make sense that they’d put more trust in you with the biggest purchase decision they’ve got to make?

It may. But that’s only part of what they mean when they say, “We’re here to stay.”

It’s just as much a statement about buying land from a developer or a farmer. During the run-up of the early 2000s, land was a game of magic numbers, and developers and land sellers got to name their price on home building lots.  Now, those public builders who were tripping over one another to outbid everybody on every piece of dirt that showed up in auction are now tripping over one another to exit markets that don’t pencil for them. For, developers and land sellers, “we’re here to stay” means they can and will work with you, even to the point of soft take downs, so that you’ll have access to lots and they’ll continue to have a willing buyer in the market. 

It’s also about a local banking relationship that may go back generations. Yes, today so many of the community banks you used to deal with have been scarffed up by regional, national, and even global players. Now, after talk up the kazoo about partnerships for the first several years of the decade, many of those “partners” are among the disappeared. Your accounts have been turned over to special services “don’t call us, we’ll call you” departments whose business goal seems exclusively set on getting as much of the money they may have loaned you back in their tills immediately, while discussion of continuing to lend as they said they were going to is out of the question. 

Clearly, a bank partner will mean something different to the average private home builder when this crisis has run its course. But “we’re here to stay” today means that capital in the community, in the submarket, in the marketplace, might set its sights on home builders whose word is their bond. Even before the global credit and liquidity reset values to assets, people locally know what locations are worth, and they’re going to pay for them. Being a “we’re here to stay” kind of builder is an opportunity for people and banks who still have money and want to put it to work investing in something they know.

“We’re here to stay” means that your subs, trades, and materials suppliers won’t get left in the lurch, like with the others who just pull up their stakes and exit the market.

“We’re here to stay” is also about hiring people with more attitude and, maybe, less aptitude. If you’re like most private home building companies, you’ve had to let go of no less than half, and more likely seven people in 10 who worked for you in 2006. It’s the same everywhere. Who you’ve got left has to not only be an “A” player for today’s market, but has to help you have the ideas to deal with even a worse times than now before they get better.

Ultimately, the truth in the claim “We’re here to stay” depends on being able to build a home in a desirable community, fast, well, and efficiently, things you can only do if you’re in a local people business. Per-square-foot direct costs mean more to being here this time next year than perhaps ever in the history of U.S. home building. That’s sole proof of a home builder’s staying power.

The Wall Street Journal reports extensively on what it terms “one of the largest real-estate failures in U.S. history, capping a precarious, months-long effort to juggle the crushing $27 billion debt load it shouldered in past acquisition sprees.”

The Las Vegas Sun runs this story this morning.

Earlier Wednesday, debt rating agency Standard & Poors said it had learned that a loan backed by the Grand Canal Shoppes at the Venetian resort was transferred to special servicing after General Growth, the mall owner, couldn’t come to terms with servicer LNR Partners Inc. on an extension. This means General Growth is in danger of defaulting on the loan.

The balance on the loan, which matures May 1, is $393.7 million, S&P said.

The New York Times notes the list of the key creditors:

Among the companies listed as General Growth’s 100 largest unsecured creditors are Eurohypo, a unit of Germany’s Commerzbank that holds $2.6 billion worth of loans; Wilmington Trust and the Bank of New York Mellon, representing several classes of bonds; casinos including Mandalay Bay and the Venetian; and an assortment of retailers such as Sephora, Guess?, Borders and Macys.

In its bankruptcy filing, General Growth said that it sought permission to retain a bevy of advisers, including the investment bank Miller Buckfire, the turnaround consulting firm AlixPartners and the law firms Weil, Gotshal & Manges and Kirkland & Ellis. The document was signed by Marcia L. Goldstein, the chair of Weil’s well-known bankruptcy practice.

An industry observer draws our attention to dismaying specifics with respect to the residential development implications in GGP’s filing. Here’s our note this morning from “Jennifer.”

Click on image for access to Summerlin, Nev., info

Key to the discussion of which entities are in bankruptcy is the definition of “GGP Group”.   Page 62 of the document says “GGP, along with its approximately 750 wholy owned Debtor and Non-Debtor subsidiaries and affiliates, collectively “GGP Group”.  On that same page there is a footnote to the document which says that its Exhibit “A” lists all of the entities for which Chapter 11 bankruptcy was filed on April 16th.

At the bottom of page 64 of that document, I was startled to see the following comment blithely made by the Debtor:  “In addition to its core shopping center business, the GGP Group also owns and develops large-scale, long term master planned communities.  GGP Group has five master planned communities in and around Columbia, Maryland; Summerlin, Nevada; and Houston, Texas. These communities contain approximately 18,500 saleable acres of land.”

I then went to Exhibit “A”, listing the 200+ new Chapter 11 debtors and scrolled down.  I saw Chapter 11 Debtor names which included entities with Town Center Drive in them, and five entities with “Howard Hughes” in them, including The Howard Hughes Corporation and Howard Hughes Properties, Inc., as well as reference to a Canal Shops entity.

The standard “First Day” motions for the bankruptcy cases have been filed, including the all important motion to obtain authorization to keey paying the Debtors’ employees, and to pay them any unpaid prepetition wages. There is no indication yet as to when the first day motions will be heard.

In the Debtor’s Motion for Joint Administration of Cases (Court Document #2) which I read, it says that the GGP Group has a large unsecured line of credit, but it doesn’t say anything about how much money is available to be drawn. That document also says that most of GGP Group’s financing is through mortgages on specific properties. 

That does not bode particularly well for the Summerlin operation, because it means that any land sales which are occurring have their cash proceeds tied up, as “lender’s cash collateral”, which an angry mortgage lender is not necessarily likely to let them use.

I am afraid that this is not a good day in the history of Columbia, Maryland, Summerlin, Nevada and ??? in Houston, Texas.

The “Next Wave” of pain in real estate–based on trillions of dollars of commercial mortgage backed securities debt due over the next several years and not enough capital access to offset it–has now begun.

Residential gets another blow as a result.