NEW YORK (Reuters) - The chief executive of real estate development powerhouse, the Related Cos, thinks the U.S. economy is already in a recession and is going to get worse.
“This could really be as bad as anything I have seen in my lifetime,” said Stephen Ross, who founded Related in 1972.
“I think things are going to get worse,” he told the Reuters Housing Summit in New York on Thursday. “The biggest problem today is people don’t recognize how bad things are and getting worse.”
Ross said his firm is in a good position, as it raised capital and sold out of weak markets ahead of the downturn.
Fearing the rich supply of low-priced debt would soon come to an end, Related in April last year began looking for other sources of funding for its apartment, retail and mixed-use projects.
In December the company announced it had raised $1.4 billion from Goldman Sachs, Michael Dell’s MSD Capital, Abu Dhabi’s Mubadala Development Co, Saudi Arabia’s family-owned Olayan Group and sovereign fund the Kuwait Investment Authority.
In 2005 and 2006, Related canceled Las Vegas condominium projects Las Ramblas and Icon Las Vegas and sold the land for a profit, fearing growth in that market was based on investment buyers rather than people planning to live there.
“It was all spec (speculative) buyers,” Ross said. “We thought ‘this is crazy.’”
Ross expects more economic stress to follow the arrival of a new U.S. president in the White House next year.
“Whenever we elect a new president, the first year they want to get all the bad news out. So we have a recession,” he said. “I think things will be somewhat unstable for first couple years.”
(For summit blog: summitnotebook.reuters.com/)
Reporting by Ilaina Jonas; Editing by Tim Dobbyn
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