Down Market Realities
Realtors would never have agreed to sharing commissions in a strong market. But in a moribund housing market, realtors have come to realize that working with discount brokers is not such a bad idea. Realtors will not block the discount brokers' access to the Multiple Listing Service (MLS). On the surface, this is good for consumers, but of course my jaundiced view is that traditional realtors will somehow co-opt the discounters and commissions will not drop that much. Commissions are high and many realtors don't do work commensurate with the level of compensation, but many realtors discount their commission if asked. If the new sharing helps start transactions, then it is a good thing. The justice department should be looking at all the additional fees charged with getting a loan and buying a home. These are the fees that annoy me.

10-Q Release
The 10-Q for Wells' Timberland REIT was released last week. A quick read confirmed my previous conversations with Wells. Timberland should have enough offering proceeds to make its first $40 million payment on the mezzanine debt at the end of June. I estimate that Timberland needs to raise over $14 million a month in investor equity to get the mezzanine debt down to $60 million by mid-October 2008. This would extend the mezzanine debt to February 2009. If Timberland's equity effort comes up short, the entire outstanding balance of the mezzanine piece is due in mid-October 2008.

Don't Eat Their Own Cooking
American Airlines' management must not fly on American's planes. American's brilliant scheme to add a $15 per checked bag charge means that few bags will get checked. More bags in the cabin means frustrated passengers and stressed-out flight attendants as they struggle with the added bags. Airlines have stopped food and cut in-plane staff, and now this indignity. Flying is going resemble a bus trip in South America.

Cracks?
The Wall Street Journal had an article yesterday on the departure of a Wachovia real estate executive. The executive built Wachovia's real estate lending business, and one of his specialties was the mezzanine loan on top of a more traditional real estate loan. This is exactly how the Wells Timberland REIT financed its lone timber transaction - first loan and mezzanine loan (in additional to the issuance of preferred stock that can be viewed as more leverage) and no initial equity. The REIT is struggling to repay its mezzanine debt and needs to get it down to $60 million by mid-October to extend the final payment to February 2009. Based on Timberland's filings, I estimate that the REIT has approximately $125 to $135 million outstanding at the end of April on its original $160 million mezzanine loan. I wonder how the departure of this executive will impact Timberland REIT if the REIT's equity comes up short and it needs to extend or refinance. The executive's departure does not change the facts and terms of the transaction but may have repercussions for investors.