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8:30 AM EST Tuesday, January 30, 2007: My favorite office building real estate syndicator is raising another fund -- their third, this one for $1 billion -- five times bigger than the previous one.

I received the subscription docs yesterday. The paperwork is due Thursday and the money Monday. This is amazingly fast. I've never seen anything this fast. But it's indicative of the boom in commercial real estate (versus the slump in housing).

It seems that:
+ We built a lot of houses in the past few years.
+ We converted a lot of office buildings into housing condominiums.
+ We ended that cycle with a shortage of offices.
+ Half the approx. 150,000 new jobs the U.S. is creating each month is going to work in offices.
+ The U.S. is building office space at half the pace it historically has.
+ We are now below the 13% nationwide office vacancy rate, which the industry regards as a sort of equilibrium rate. Below that, rents rise rapidly.
+ Office rents are rising strongly in the major real estate markets of New York, Los Angeles, Chicago, etc.

Fund I is showing a 38% IRR. Fund II is on the way to a 48% IRR. The industry uses IRR -- internal rate of return -- to measure its profitability. It covers the time the building was bought to the time it was sold, i.e. the full transaction. These rates are higher than anything I'm seeing at present -- with the exception of some small, speculative miners in Australia.

I'm rushing to get my subscriptions docs in.

Shock and Ore in mining: This piece from the Economist gives you a good feeling for what's happening in Western Australia and why I'm so excited by prospects for miners in Australia:

IN THE dry, dusty town of Dampier on the west coast of Australia, a gigantic machine lifts up railway cars, two at a time, and tips out their contents—roughly 110 tonnes of iron ore apiece. The crushed rock falls onto a conveyor belt, which carries it to ships queuing up in the nearby harbour. They, in turn, will distribute it to steelmakers around the world—at a price. In late December, Rio Tinto, the mining firm that owns the facility, announced that one of its biggest customers had agreed to pay 9.5% more for iron ore in 2007, in line with price rises announced by other big producers. The latest increase follows jumps of 19% in 2006 and 71.5% in 2005 (see chart).

Steelmakers around the world are chafing at this long run of price rises. Indian firms are calling on the government to cap exports of iron ore, to ensure affordable local supplies. The Chinese authorities are making it harder for small producers to import iron ore, to reduce competition for the stuff. Some steelmakers, including Arcelor Mittal, the world's biggest, are developing ore deposits of their own.

But demand still outpaces supply, thanks to fast and unforeseen growth in countries like China and India. “We can sell every tonne we produce, and more,” says Dave Smith, the managing director of Pilbara Iron, a division of Rio Tinto. He says his firm is working flat out, in difficult conditions, to increase supply. The port at Dampier, for example, could handle no more than 68m tonnes of ore in 2003. By the end of 2006, its capacity had almost doubled, to 116m tonnes. By the end of 2007, it should reach 140m tonnes. The firm's other port in the region, Cape Lambert, is also expanding rapidly.

Naturally, Rio Tinto is also expanding its mines and the railways that ferry ore from the interior to the ports on trains more than 2.5km (1.6 miles) long. Back in 1998, when the firm opened a new mine called Yandicoogina, planners expected a slow expansion in output to 15m tonnes a year in the remote future. But it is already producing 36m tonnes, and should reach 52m by the end of 2007. The firm is also doubling up tracks on its rail network—the world's biggest in private hands.

All these expansion schemes have cost Rio Tinto A$5 billion ($4 billion). But growth is getting more expensive, as other mining firms, and Western Australia's booming oil and gas industry, compete for labour and materials. “We have a shortage of just about everything,” Mr. Smith complains. The delivery of new locomotives to pull the ore trains, among other items, has fallen behind schedule. The price of tyres big enough to fit the mining firms' gargantuan trucks has doubled in recent years, he says, while construction costs for new facilities have increased by half.

Workers themselves are another problem: with labour in short supply, oil and mining firms are poaching staff from one another. The annual turnover of employees has reached 100% at some of Rio Tinto's sub-contractors. Shops and restaurants in the mining region are short-staffed, hotels and flights are fully booked, and car-hire agencies have no vehicles to spare.

Obtaining permits can also cause delays. All construction projects must meet strict rules concerning damage to the environment and aboriginal heritage. The bureaucrats who process this paperwork are overstretched, says Mr. Smith, in part because many of their colleagues have resigned to drive trucks in the mines. At Tom Price, Rio Tinto's biggest mine in the area, managers point out scrub-covered hillsides whose cultural significance they are debating with the authorities. Even the weather slows things down: six cyclones battered north-western Australia in 2006, and another is now prompting closures at several mines and ports.

Rio Tinto's scale—it is one of the world's biggest mining firms—should help it cope with these pressures. It pools its procurement to increase its clout with suppliers and to allocate goods where they are most needed. Even so, says Mr. Smith, “We're only barely keeping pace.” It will be a little while yet, it seems, before the world's steelmakers get much relief.

Nicoderm Patch
Two priests are in a Vatican bathroom using the urinals.

One of them looks at the other one's penis and notices there's a Nicoderm patch on it.

He looks at the other priest and says, "I believe you're supposed to put that patch on your arm or shoulder, not your penis."

The other one replies, "It's working just fine right there. I'm down to two butts a day.

IF YOU LAUGHED.... YOU'RE GOING STRAIGHT TO HELL, says the reader who sent me this one.

The key to supersex:
The Italian man said, "Last week, my wife and I had great sex. I rubbed her body all over with olive oil, we made passionate love, and she screamed for five full minutes at the end."

The Frenchman boasted, "Last week when my wife and I had sex, I rubbed her body all over with butter. We then made passionate love and she screamed for fifteen minutes."

The Jew said, "Well, last week my wife and I, we also had sex. I rubbed her body all over with schmaltz (chicken fat). We made love, and she screamed for over six hours."

The other two were stunned. The amazed Frenchman asked, "What could you have possibly done to make your wife scream for six hours?"

The Jewish man said, "I wiped my hands on the bedspread."

Oih!

This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads. Thus I cannot endorse any, though some look mighty interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. That money, if there is any, may help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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