CDC Commercial Inc

Monthly Letter for November 2008

November 3, 2008

Re: Monthly Letter

Dear Clients:

“…public credit depends on public confidence… The financial crisis in America is really a moral crisis, caused by the series of proofs …that the leading financiers who control banks, trust companies and industrial corporations are often imprudent, and not seldom dishonest. They have mismanaged…funds and used them freely for speculative purposes. Hence the alarm of depositors and a general collapse of credit…”

These words were written on November 2, 1907

The mortgage securitization idea is not a new one, in fact it has been tried and failed six times from the Civil War to World War II.

A year ago we paused as we watched the homes in our neighborhoods burn. This year we again took pause as we watched our hard earned savings burn on Wall Street. The ugly thing is that the federal government providing the “solution” is the same entity that has been asleep at the wheel while Freddie, Fannie and the Investment Banks stole us blind. I find it fascinating that on the way up we espouse free enterprise, but socialism is the preferred method on the way down. If there is a silver lining in this mess it is that we are wringing out the inflation/oilflation that was creeping into our system. As I tell my wife, the good news is I’ll be able to afford to drive my SUV to work. The bad news is that I’ll have to drive it to work for another 25 years so I can afford to retire!

It is time to think and rethink. Will you exploit this situation or will the situation exploit you? Buy low, sell high is still a good idea. A penny saved is more than ever a penny earned. A fool and his money are soon parted (although they may be reunited in a government bailout). Warren Buffett has a simple rule, “Be fearful when others are greedy and be greedy when others are fearful.”

Some of you thought I was crazy when last month I said we were nearing the bottom (I said bottom, not end). Now it is time to look for a solid uptick. Residential has started to show promise with less foreclosures, more houses sold etc… However, that trend may reverse for a little longer due to this month’s financial crisis. The commercial market was going to make it through relatively unscathed, but tight credit and tight-wad consumers will now impact commercial more. Remember that the stock market is about a six month leading indicator…so they’ve already voted for President. I still say we’re at the bottom and while I thought the turn was going to be by May 2009, I think it is closer now to this time next year.

It is easy to give in to excessive pessimism these days. But the US model – based on productive labor, free trade, fewer rules, lower taxes and rewards for entrepreneurial effort – is still sound. We’ll soon emerge stronger and better for our current tribulations.

We’re now entering an age of accountability. People now pay attention to quality, not just throw their money at junk. Banks are loaning their money (not Wall Street’s), automakers are selling cars – not financing. And we’re in the real estate business, not speculators.

At CDC, we’re looking at this time as if we’re in “the red zone” in a football game. We’re expending exceptional effort to find and push deals across the goal line. We are now in a time where Buyers and Tenants are king again. For us, negotiation is back in style. Now, more than ever, it is time for all of us to keep our eye on the ball.

Below you will find a story my dad gave me 20+ years ago that his dad had given him in the 1930s. We’re glad to have you as our customer and continue to strive to bring customers to your properties.



Don S. Zech

CDC Commercial

Real Estate Services

I am your customer

I am your customer. Satisfy my wants – add personal attention and a friendly touch – and I will become a walking advertisement for your products and services. Ignore my wants, show carelessness, inattention and poor manners, and I will simply cease to exist – as far as you are concerned.

I am sophisticated. Much more so than I was a few years ago. My needs are more complex. I have grown accustomed to better things. I have money to spend. I am an egotist. I am sensitive; I am proud. My ego needs the nourishment of a friendly, personal greeting from you. It is important to me that you appreciate my business. After all, when I buy your products and services, my money is feeding you.

I am a perfectionist. I want the best I can get for the money I spend. When I criticize your products or service – and I will, to anyone who will listen, when I am dissatisfied – than take heed. The source of my discontent lies in something you or the products you sell have failed to do. Find that source and eliminate it or you will lose my business and that of my friends as well.

I am fickle. Other businessmen continually beckon to me with offers of “more” for my money. To keep my business, you must offer something better than they. I am your customer now, but you must prove to me again and again that I have made a wise choice in selecting you, your products and services above all others.

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