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In Acquisitions, Anything Goes

Joint ventures. Acquisitions of public companies. Non-traditional product plays. In today's hyper-competitive market, investors are employing a wide variety…

By Maria Wood | Updated on April 25, 2006

Joint ventures. Acquisitions of public companies. Non-traditional product plays. In today’s hyper-competitive market, investors are employing a wide variety of strategies to source and complete real estate purchases. With yields getting compressed, buyers are finding they must venture outside the norm to achieve attractive returns.

“It’s probably the most competitive environment we’ve seen in a long time,” declares Dan Fasulo, director of market analysis at Real Capital Analytics in New York City. “Whereas in the past you might have had two to four bids on a property, now it’s not uncommon to have double-digit bids for the most desirable assets. For some unique properties here in Manhattan, I’ve actually heard of up to 30 bids, which just blows my mind.”

And that competition is having an impact on yields and the deals institutions now target. RCA recently did a study on the rates of return in different groupings of acquisitions based on purchase price. It found that yields were lowest in the$50-million-plus and the under $20-million categories. That’s because those areas were the most active, Fasulo asserts.

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