On the demand side, there really is sh*tloads of money sitting on the sidelines, and there really is still a face off between buyers and sellers. And those who don't have to sell just aren't selling.

A friend who manages a university endowment went into 2009 with $30 million in open commitments to more than 10 real estate funds, and he ended the year at $28 million open. The reason? capital calls to pay management fees, nothing else – not one fund did a deal last year.

I spoke to a partner at one of the largest apartment management companies in country last week (privately held); they have plenty of internal cash earmarked for acquisitions, and they manage a $50 million, largely un-invested discretionary fund. Nevertheless, they only did one deal all year – and that was at a 7 cap on an A- property in Central Florida, hardly what I would call exciting. He said it was very challenging to find well-priced deals.

A broker I speak with in the Midwest has 20 offers on a 492 unit (you'd need to hire a mayor to manage the place) soon-to-be-bank owned C property, but the bank is not a forced seller, and they may decide just to run the place and wait it out.

Another broker in Southern California has 20 offers on an A-/B+ property, many of which were far above initial expectations, but the seller, a certain CMBS servicer located in Kansas, believes time is on their side and won't pull the trigger.

We made an all-cash, 30 day close type offer on a non-institutional deal (under $10MM; tertiary market) but the seller has been la di da-ing all month long while they sit back and collect their rent checks….

The one exception to this may be land deals, but there is still plenty of cash being thrown at raw land even in Arizona, and I can send you the bid sheets….

I think part of the reason for this is that there is so much more data available now than in 1990, and a lot of it has been democratized by the internet. Most people can see what's happening in almost real time, not only with loan maturities, but also with demographics and the development pipeline. Consequently, there has been a ton of money raised against the opportunity, but no sensible seller will give away 20% IRRs.

I personally have been waiting for 2010 since late 2005, and fervently so since late 2008. However, my partners and I now think it's going to be a slow burn of bad deals over several years into a pirannha pond of private equity, and we'll need to be just as careful as we were in 2006.

Good to see you back and in force.

Over 9% of loans in CMBS are now in workout/modification mode. All this supply hasn't hit the market yet, most of it isn't yet REO. Don't you think that implies that we have further down to go?