Tuesday, August 7, 2007

But what of the megadeals?

Although I'm glad not to be working on them right now, I will admit that all the multi-billion dollar deals that popped up in the last couple years have captivated me. Notwithstanding my most recent post on research in the market, the new big question of the day is whether the delay in the Tishman/Lehman acquisition of Archstone is a signal event.

My take: Perhaps it is, for megadeals and crazy cap rates, but not for the market in general. Okay, these guys may be encountering more resistance than a few months ago in raising $17.1 billion in debt (gee, imagine that -- what is the world coming to?) or lining up some flips to cut the risk. Nor is this necessarily even a bad deal in my opinion. It just means people are not treating deals like Monopoly money right now, and that is a VERY good thing. A delay does not change the fact that there is SO much money in the market for sensible plays. I know that players are looking to make acquisitions, but only if the conditions are right and not nonsensical.

So, if you feel like Chicken Little right now, stop. The sky's not falling yet. Yes, there are clouds and you have to watch for a big storm, but remember from someone who lives near corn and soybean fields that a little rain is good for the crops. (Oh jeez....could that be the most cliche-ridden paragraph I've yet written?)