01/28/2008

Rockefeller Center Redux

Hello:

During the last real estate boom in the early nineties, we welcomed foreign investors to purchase some iconic properties -- Rockefeller Center on the East Coast and Pebble Beach Golf Course on the West Coast to name a few. "Take it!" the sellers said. "We don't need it!" Then, a few years later, domestic investors bought back the properties, quietly and at greatly reduced prices.

Now, we are welcoming foreign investors, sovereign funds in particular, to purchase large stock positions in our Wall Street firms. Hmmm.....is there a parallel?

Washington balked at CNOOC's offer to buy Unocal in 2005, and complained greatly when DP World, a port operator owned by the government of Dubai, sought to take over port terminals in New York and New Jersey. Nary a beltway whimper has been heard about capital infusions into major Wall Street firms...yet.

According to The Economist, Insurance companies have approximately three times the combined reserves of sovereign funds, and Pension funds have approximately four times their reserves. Keep in mind that sovereign funds are sovereign only in their countries. Let's hope that they continue to play nice because in our sandbox, it is our rules.

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Terri G. Millson, CIMA, CIMC President

Ray Dicius, CSA, GEPC LPL Branch Manager