we've both had a fair amount of
experience in real estate and charlie
made early money in real estate
the second point is the more important
points real estate is not a commodity
but
i think it tends to be
more
accurately
priced critically developed real estate
more accurately priced most of the time
now during the rtc period when you had
huge amounts of transactions and you had
a you had an owner that didn't want to
be an owner in a very big way and they
didn't know what the hell they owned and
all of that sort of thing i mean you had
a lot of mispricing
then and i know a few people in this
room that made a lot of money off of
that but
under
most conditions it's
it's hard to find real estate that's
really mispriced i mean when i look at
when i look at the transactions that
reits engage in currently and you get a
lot of information on that sort of thing
they're very similar but it's a
competitive world and
and you know they all know about what a
class a office building and you know in
chicago or wherever it may be is going
to produce at least they have they may
all be wrong as it turns out because of
some unusual events but
but it's hard to argue with
the current conventional wisdom most of
the time
in the real estate world but
occasionally there have been some you
know there there could be
big opportunities in the field but if it
if they exist
it will certainly be because there's a
there probably there'll be a lot of
chaos in real estate financing for one
reason we've done some real estate
financing and
you have to have the money shut off
to quite a degree probably to get any
big mispricing across the board
charlie
yeah we don't have any
competitive advantage over
experienced real estate investors
in the field
and we wouldn't have if we were
operating with our own money as a
partnership
and if you
operate as a corporation
such as ours which is taxable under
chapter c of the internal revenue code
you get a whole layer of corporate taxes
between
the real estate income and the use of
the income by the people who own the
real estate
so
by its nature real estate tends to be a
very lousy investment
for people who are taxed under
sub-chapter
c of the
code relating to corporations
so the combination of having it
generally allows the activity for people
with our tax structure and having no
special competence in the field
means that
we spend almost no time thinking about
anything in real estate and then such
real estate as we've actually
done like holding surplus realist
trying to sell it off i'd say we have a
poor record ad
yeah c-corps really does it doesn't make
any sense
i mean i know there are c-corps around
that that are in real estate but
there are other structures that are more
attractive there really aren't other
structures
i mean lloyd's is an attempt at it to
some degree but there aren't other
structures that work well for big
insurance companies or i mean you can't
have a walmart very well that does not
exist in a c corp so
they are not subject to
s corp or partnership
competition that determines the returns
on capital in in in in the discounts to
our field
but
if you're competing
with s equivalent of s corps
reits uh or partnerships or individuals
you've just got an economic disadvantage
as a
c corp which is for the those of you who
don't love reading the internal revenue
code it's just a standard vanilla
corporation that you think of all the
dow jones companies all of the s p
companies and so on
and
as charlie says it's unlikely that
the disadvantage of our structure
combined with the competitive nature of
people with better structures buying
those kinds of assets will ever lead to
anything
really interesting although i would say
that
we missed the boat to some extent
during the rtc days i mean uh
it was
a sufficiently inefficient market at
that time and there was a lack of
financing
that
we could have made a lot of money if we
had been geared up for it at that time
we we actually had a few transactions
that were pretty interesting but not but
nothing
that was significant in relation to our
total capital we thought significantly
about buying the irvine corporation
and it became available so
that's the only big one i can remember
that we seriously thought about
yeah that that was in 1977 or so
yeah mobile oil was interested in you
know don brent ended up putting together
a group port but
you know that kind of thing
could conceivably happen but
it's unlikely