Tuesday, January 22, 2008

The whole world's buying...our dirt, again

Here's an interesting story on a Spanish billionaire, Amancio Ortega, buying 730-750 North Michigan Avenue for $350 million. Why is it interesting?

Even in this "down" market, the seller did not budge on its price and ended up getting a 40% unlevered return in three years. Not bad. It also shows that foreign money thinks that not only our companies are cheap, but so is out dirt...yes, it is still cheap, especially given exchange rates.

Now, we had a frenzy of foreign buyers here in the 1990s, as I recall. Some did well, others didn't because they dumped out at the wrong time. But it wasn't the end of the word then and it isn't now.