(To read more on the debt and equity markets, click here.)
NEW YORK CITY-"When there is global liquidity, it's hard. You have to be careful and you have to be smart," said Russell Appel, president of Praedium Group. He was among the panelists taking part in the "Opportunity and Private Equity Power Panel." His firm looks for "under-the-radar situations. We can't buy much stabilized assets." He sees the situation remaining the same for the near future.
The discussion was part of the RealShare Structured Finance conference, which was produced by Real Estate Media Network, publisher of Real Estate Forum, Real Estate New York and GlobeSt.com. The event was attended by more than 200 industry professionals. The panel was moderated by Dennis Yeskey, national director, real estate capital markets at Deloitte.
"Our challenge is in finding investment opportunities, not raising capital," said Douglas Lyons, managing director, Transwestern Investment Co. LLC. "There is tremendous liquidity." His firm sees opportunities in office, industrial and retail sectors. "We can't make our returns in multifamily without really pushing the leverage." He said Transwestern has completed four transactions in distressed situations, two of those were retail properties. "We'll see more of those opportunities as interest rates rise."
"We've been lucky with cap-rate compression," cautioned Michael McNamara, managing director for Lehman Bros., cautioned. "It takes discipline to not take as much financing as you can get."
With Lehman's two funds, McNamara said they expected to have an equal percentage of foreign and US-based assets, but they've found that 60% of the holdings in the second fund are in the US and driven by three to four property types. Of the foreign properties, he said the fund's holdings are moving further east into Poland and Hungary. Having new hotel assets in Tampa and Houston, Lehman "believes in the recovery of the hotel market."
Jeffrey Barclay, managing director, acquisitions group, ING Clarion Partners, said his firm also sees promise in the hotel market. In fact, the firm, which had not invested in the sector since the 1990s, has made two investments this year. That's not the only transition for the firm. "We're moving to a financing structure going forward. …Things move so quickly. Reaction is instantaneous."
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