Billions were raised in different types of private equity funds in anticipation of liquidation prices on commercial real estate. Only the day when an RTC-like mechanism that forced lenders to spill the glut of under-water properties on the open market never materialized. Yet, as the freeze begins to thaw, and sales velocity increases, how can you position yourself at the head of the trough to get the best of the distressed assets?
Back in the late 1990’s as tech start-ups attracted massive amounts of venture capital but had little or no history of earnings, we saw the massive fallout just a few years later when the tech bubble burst. Just a few years ago, after ridiculous price per square foot figures where being achieved, we saw the real estate bubble burst as the economy soured. Now, the two bubbles are going on a fancy date in Silicon Valley. Something tells me this could get ugly.
Something that seems to have been plaguing residential neighborhoods for years now, is the effect that foreclosures and/or short sales have on the surrounding homes. As this article points out, government is finally waking up to the damaging and long-lasting impact this can have on home values and homeowners who have done everything right. Much like the stock market, your fortune is in the hands and actions of others, regardless of the fundamental values of your home, or your stock portfolio. So what about commercial real estate?
For much of the downturn, we saw cap rates rise across all asset classes, from 50-100 basis points in strong markets and strong assets classes like multi-family, all they way to 400-800 basis points for riskier and less stable assets like hotels. The single tenant net lease market was no stranger to this phenomenon either. However, as cap rates continued to expand for much of the commercial real estate industry in 2010, research firm Boulder Group out of Northbrook, Illinois recently released a report on first quarter numbers. The news was promising.
Its easy to attract capital with superior risk-adjusted returns. It is a lot harder to deliver on them. There are many reasons why this is the case, and we thought it would be helpful, with the guidance from Deloitte, to provide our readers with the top 5 key factors to raising a successful real estate private equity fund.
We just wanted to let our Philadelphia area-based readership know that Llenrock Blog author Dave Jacobs will be speaking on Tuesday, April 26th at the ULI Event: Social Media and Engagement. The deadline for registration is this Thursday, April 21st. …
Medical office buildings were all the rage in commercial real estate before the recession, were the only rage in commercial real estate during the recession, and remain all the rage after the recession. Why? Namely because of this country’s ever expanding healthcare needs. We can also blame poor diet and exercise habits, a lack of reasonable healthcare reform, and skyrocketing healthcare costs. This means there is and will continue to be a need for practices all across the country, which provides stability for landlords. In addition, due to the specialized nature of the requirements for doctors, landlords can typically charge higher rents as well. So what goes into a doctor’s decision making process when choosing medical office space? Landlords……listen up.
This past weekend, an impasse between democrats and republicans regarding how to allay budget concerns, was avoided at the last hour. Without getting into a political blame game, this could have had dire consequences on the economy, which has an indirect impact on the commercial real estate market. In addition, a government shutdown could have a drastic and direct impact on the commercial real estate market as well.