MoneyNews
Wednesday, Oct. 26, 2005

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The man Fortune magazine says is "the best real estate investor on the planet today" is getting out of the U.S. real estate market - and is suggesting that others do the same.

Meet Tom Barrack. For sure, he is not your run-of-the-mill real estate investor - the billionaire and former assistant secretary of the interior in the Reagan administration oversees a $25 billion portfolio of assets.

His portfolio includes some of the world's most prestigious properties, including the Raffles hotel chain in Asia, the Aga Khan's former luxury resort on Sardinia, and Resorts International, the largest private gaming company in the U.S.

Barrack's Colony Capital of Los Angeles, one of the largest private-equity companies devoted strictly to real estate, has seen returns of 21 percent a year since 1990.

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He is a savvy investor. Barrack bought the Fukuoka Dome stadium in Japan because he calculated that the titanium in the retractable roof was worth as much as the purchase price, according to Fortune.

He also bought and sold New York's Plaza Hotel for a quick $160 million profit, and London's posh Savoy chain, pocketing another $270 million.

Now Barrack, an avid polo player, likens the U.S. real estate investment market today to a polo field.

"I feel totally safe playing polo on a field full of pros, but when amateurs are all over the field, someone can get killed," he told Fortune.

"They charge after every ball and don't know when to hold back."

Similarly, in the real estate market "there's too much money chasing too few good deals, with too much debt and too few brains."

The amateurs are going to get trampled, he believes - taking the seasoned pros with them. Says Barrack: "That's why I'm getting out."

He sees signs of the technology bubble mentality in the American real estate market today, with hedge funds, private-equity groups and rich investors all bidding up the same properties.

The bubble will burst soon, he believes.

In fact, Warren Buffett has just sold his California home.  Find out why and how you can profit from the coming real estate crisis.  Go here now.

Here are some real estate ventures Barrack is getting out of - or buying into, according to Fortune:

Out: Condos in Los Angeles. He believes speculation has overheated prices and is taking profits from condo sales while he can.

Out: Condos in Miami. Developers are pre-selling their units in hot markets like Las Vegas and Miami. But with the rise in construction costs Barrack foresees, they'll end up spending more to build the projects than they are now selling for, resulting in busted deals and eventually lower prices.

Out: Golf course homes at Toscana Country Club in Indian Wells, Calif.

In: Hotels in Asia - due to low prices, low labor costs and rapid growth.

In: The Accor hotel chain in Europe. Barrack bought a $1.3 billion stake when European hotel prices had bottomed out.

In: Casinos in the U.S. He already has a gaming license - and licensing laws create huge barriers to entry.

Barrack is not alone, Warren Buffett, Paul Volcker, Sir John Templeton and Alan Greenspan have all warned real estate asset prices will bust. Find out how to profit from the coming real estate crash Go Here Now.

Act now and protect your wealth.  In this hot-off-the-press special report you'll discover:

• Ten steps to take now to protect yourself from the coming crash.
• The seven sectors and 53 bubble stocks to sell now.
• Why experts predicting a soft landing are dead wrong.
• The two types of properties you need to unload now.
• The single best investment for profiting from the coming crisis. If you missed the profit-party on the way up, here's your great second chance to make even bigger profits on the way down.
• Five early warning signs that the bubble is about to burst.

And that's just the beginning!

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