E&Y: Dislocation and Volatility Expected to Continue in '09

NEW YORK CITY-For the real estate private equity business, 2009 looks to be “a year of continued dislocation and volatility,” says Ernst & Young’s Gary Koster in a new report. Based on a survey of 40 real estate fund sponsors, E&Y’s report cites mortgage financing and the ability of fund sponsors to refinance maturing debt on commercial properties in the next 12 to 18 months as the single most important concern in today’s market.

In fact, debt-related concerns comprise three of the top strategic priorities cited by fund managers in E&Y’s 2009 Market Outlook–Trends in the Real Estate Private Equity Industry report. The top five include: refinancing maturing debt, raising capital for a new real estate fund, property/portfolio sales, obtaining acquisition financing and deleveraging the portfolio.

“It seems that, despite the widespread infusions of capital into various lending institutions through economic stimulus programs it appears, there is still very little, if any, lending taking place in the real estate industry right now,” says Koster, head of E&Y’s real estate fund services practice, in a release. “Our survey suggests that fund sponsors are not obtaining non-recourse financing on new deals.”