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“Name is top fish. I m executive managing director with jll and i help lead lead our real estate capital markets finance practice based in houston texas. Obviously the bank primary construction lending source that has been curtailed. Quite a bit in the last year.
They also have a place in the shorter term standing loan space. The live companies are always there to do. Mostly the long term fixed rate and subsoil. A transaction is mostly the higher quality transactions in the major markets.
Cmbs is a vital provided to the rest of the states to some of the smaller markets. Some of the properties that maybe don t need the criteria for the live companies and then certainly the gfc. The government agencies are our primary multifamily lenders who are getting 100 plus billion dollars in multifamily loans last year and are the real catalyst behind why multifamily continues to be a leader in terms of valuation and liquidity of the marketplace. What banks are doing right now in the construction in the department.
They ve got much more conservative with respect to their loan to cross they ve gotten a little pricier as you would imagine in a constraint market and it s it s having an impact on slowing things down and that s probably ultimately good for extending our cycle. We began our climb out of financial crisis in the third quarter of 2010 and we ve had a good long slow steady run of success and would it what it tells me is the liquidity and the resilience of the real estate debt markets is is very sound. We ve had lips along the way that repriced and keep the market in balance. And i think that s good.
But the one thing that we looked at more than anything else is just the liquidity that s in the marketplace. If if something drastic happens at some other unforeseen event that would curtail that liquidity with the other threat. Frankly that we have is if if we have continued rising long term rates that creates higher alternative yields in other investments. And that might pose a just a competitive threat to the to the month.
The capital is seeking that return in real estate right now so right now the tide is coming in the tide is we think the type of still come in if if we go on a long hike in long term. Rates. Then then that poses a certain concern for us. There s going to be a change in the number of players out there in a cmds marketplace.
That market seems to be much more competitive. It seems to be the risk retention rules that are in place right now. I think will reduce the number of players currently in the marketplace. Everybody s wondering where that wall is because they re not feeling it in my mind.
I think pipelines are good. But they re not if the to the level that it would suggest by just looking at the bar graph of maturities and a lot of those maturities have already been refinanced and be capitalized a lot of them are going to be requiring additional capital because a lot of those leftover couldn t be recapitalized along the way and so they re going to need to be new equity infused or some. Other some other way of getting out. So i do think the rest of the year is going to be very interesting to see what how that that high point in the bar graph manifests itself in the marketplace.
And calculating the probabilities well in this case..
We re going to be flipping this quarter twice so on our first flip. We have two possible outcomes getting a heads or getting a tails. And if we had gotten a heads on our first trial. We have two possible outcomes of getting a heads again or getting a tails and how do we gotten a tails on the first trial.
We have the possibilities of getting either a heads or a second tails. So actually when we look at it there are four possible outcomes for these experiments. Let s take a look at them in another way. That s maybe a bit easier to understand so if we put the results in a chart.
We can see that we have one possibility of getting two heads in a row. A second possibility of getting one heads and then a tails a third possibility of getting a tails and then a heads and then finally a fourth possibility of getting two tails in the row. So if we do an experiment by flipping a coin twice there are four possible outcomes. So if we re focusing on possibility one getting two heads in a row.
We have a 1 4. Chance of getting that and that s as likely as any of the other possible outcomes. Let s take a look at the numbers behind. There.
And see if we can figure out how to get 1 4. Well. If we re trying to get two heads in the row. That means we need to get a heads on the first trial.
Which is a 1 2. Chance. You also have a 1 2. Chance of not getting a heads getting a tails.
But right now. We re focusing on getting a heads. Okay we have a 1 2. Chance of getting a heads in the first trial and a 1 2.
Chance of getting a heads in the second trial. So that gives us these two probabilities. Here 1 2. And 1 2.
How do we relate those two numbers together to get a 1 4..
I think you ve gotten it right we re going to multiply and if we multiply 1 2. Times 1 2. We get 1 4. So that s what we do with our probabilities.
Here. If we know we have a 3 out of 10 chance on the first trial and a 2 out of 9 chance on the second trial. We can simply multiply those two probabilities together. We get 6 out of 90 or 1 out of 15.
Okay. Which is a pretty small chance think about that if you had 10 beans in a bag and you re trying to get 2 from a pile of 3 within that bag of 10. It ll be a very small chance of getting those at random you re much more likely to get a red or a yellow in there by accident. Okay let s take a look at another example pretend that you and your friend are at the fair and they re having a raffle and in fact you notice that there s not very many tickets in the drum.
There and a you and your friend both enter. There s eight total tickets two of which one belongs to your friend and one belongs to you and they re actually doing two drawings in a row here and we want to know what is the probability of both you and your friend winning first question we want to ask is how many times. We repeating this test or how many trials do we have here in this case. Since there s two drawings.
We re going to have to trial. Let s take a look trial. One we have all eight tickets. Both you and your friends are still there so it gives us a two because there s two tickets that ll make us happy out of an eight total amount of tickets and once one of those tickets is removed because we re assuming that the trial was successful seven total tickets.
Now and one of those. Which is a winner for us. So now we have two fractions 2. Over 8 1.
Over. 7 go ahead and combine them so 2 over 8 times 1 over 7 gives you 2 over 56 or 1 over 28. Still pretty rare odds of both you and your friends winning in a even such a small raffle try the calculation with 800 total tickets. And you ll see what i mean okay.
Let s take a look at this example here. I m sure you re all familiar with spinners and the question. We re going to ask today. Is what is the probability of spinning a number greater than 4 twice in a row.
Okay so we actually have two numbers here that are greater than 4..
We have 5 and we have 6 and since we re going to be spinning the spinner twice. We have two trials so on spinner 1. I m going to spin the spinner and hypothetically land on either. 5 or 6.
One of those will be removed and we ll get over to trial. 2. And we ll spend and now since there s only one that will make us happy out of five total wedges. We ll take those two numbers and multiply them together wait a minute does this make sense is that the way a spinner works.
When you spin a spinner and it lands on a number do you lose that option for the next round. No no matter how many times. I spin a spinner. I m always going to have the same number of possible outcomes and if i m looking for specific results.
I m always going to have that same amount of specific results. Remember no matter. How many times you spin a spinner or roll a dice or flip a coin. It will always have the same number of possible outcomes.
So what s the difference here on the left hand. We ve got these spinners that don t ever change no matter. How many times. We repeat.
The experiment and then we have something like a bag of jellybeans on the right hand side that does change every time. We do an experiment in fact might drastically change depending on how many times. We do an experiment well those two things are called events and we can define them as being either independent or dependent independent are vents are when the outcome of the event does not influence. The outcome of a second event.
So again flipping a coin spinning a spinner rolling a dice no matter. How many times we repeat those experiments. The situation is always going to be the same however with dependent events. The outcome of one event does influence the second event so for example drawing cards or picking from a bat.
And that only works when drawing items are not returned. So a question you ll want to ask yourself when solving for compound. Probability is does it depend what happens. The first time if the answer is no then the events are independent.
If the answer is yes then the events are dependent..
It depends what happens so let s go back to our spinner problem spinner. Used in the second trial is exactly the same as the spinner used in the first trial. No matter. How many times you spin.
It it will always have the same number of outcomes that to wedge is greater than the number four out of six total wedges is the same probability we have for the second trial. So as you probably expect we take the two fractions and we multiply them together this would be true if we did three trials five trials or a hundred trials two over six times 2 over 6 gives us. 4. Over 36.
Which we can reduce to 1 over. 9. Oh wow. Looks like we ve got another one of these stretch.
It questions. Well. Okay. Let s take a look at it that gentleman you re seeing in front of you there.
That young man. There is bobby fischer and bobby fischer. Is well known for being one of the finest chess players ever in the history. Some say he s the greatest ever and when young bobby fischer was just 14 years old he was in the finals of actually eight different us championship chess matches he got into the final round of eight different ones and we want to calculate here what is the probability that bobby wins.
All eight of those knoll matches so we have a probably a 1 2. Chance of winning. Because he s just got to play one round against one guy so he s either the winner or he s not and i guess we could take all those numbers and multiply them together and that gives us 1. Over 256 a very small chance no no i hope you guys picked up on that there actually we wouldn t do that because believe it or not fischer.
The guy there on the left there with the big grin was actually a genius and a an expert in chess. In fact he at 14 years old won all eight of those championships. Because remember chess is not a game of random chance. It s a game of skill and probability.
Only works for random games of chance not for games of skill or ability ok just remember that all right you guys thanks so much for coming again and we ll see you next time for our next adventure into the world of mathematics. ” ..
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