Search
 

The Birds Come Back -- Before Spring Arrives

Since the late 1990s, opportunity-vulture fund investors have had slim pickings in the U.S. Core and value add funds crowded them out in relatively distress-free markets with ample capital flows pushing up prices in frenzied bidding. Opportunity funds, managed by big investment banks and global financial...

By Jonathan D. Miller | Updated on January 28, 2008

Since the late 1990s, opportunity-vulture fund investors have had slim pickings in the U.S. Core and value add funds crowded them out in relatively distress-free markets with ample capital flows pushing up prices in frenzied bidding. Opportunity funds, managed by big investment banks and global financial giants, turned tail, targeting emerging Asian markets and Europe where higher risk development projects could score outsized returns.

Well, the birds are back, circling in the sky, waiting for action. We have talked about problems surfacing among recent buyers who overpaid and overleveraged. Near-term rents won’t cover debt service for many of these deals and many borrowers who counted on refinancing on more favorable terms come to terms with the capital crunch. Some small REITs struggle with lower share prices, public company costs, and deteriorating markets. Homebuilders sell inventoried land at cents on the dollar, trying to hang on — no one anticipates demand to pick up for new housing anytime soon. Condo projects crater in Florida and southern California. And who knows what will happen to all those loosely underwritten loans in all those recent vintage CMBS and CDOs?

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.