I was intrigued by the following. Why should the yield from commercial
property be so low for so long ?
"Lehman Brothers pointed out in a recent note that today's valuations
may actually just reflect the re-establishment of an old market norm:
"The reverse yield gap, which prevailed for 40 years from 1958 to
1998, has reappeared, with the rental yield from a building less than
the cost of borrowing money to buy it. The leveraged private
companies, we believe, have been decisively priced out of the market,
with pricing power having shifted to equity buyers.""
- posted 13 years ago