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Distressed Funds Start to Call Market Bottom

Some distressed property funds will be letting loose the firepower they have built up over the past several months, by targeting bargain-basement-priced assets.

By Erika Morphy | Updated on April 22, 2008

Funds to snap up distressed properties – both in residential and commercial markets – have been forming ever since the real estate bubble burst, and with greater momentum since the beginning of the capital market crunch. The past year or so has been painful for most participants; the silver ling is that it appears that the bottom may be in sight, at least according to a handful of funds that are readying their business plans for Q3 and Q4.

It is not surprising that many are based out of South Florida – where signs of the real estate bubble burst first became apparent. Miami-based ARE Asset Management, for instance, has launched two offshore investment funds with $600 million in commitments. The firm plans to begin acquiring assets within the next 30 days.

ARE Asset Management will not be levering its capital. Other firms, though, plan to do so, delivering a multi-billion-dollar wave of purchasing into the market.

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