Adler: For the past two years, the industry readied itself for there to be a “fire sale” of properties by desperate owners trying to liquidating their assets. But properties never made it to the market because neither developers nor lenders were incentivized to sell.

LeClaire: Why weren’t they incentivized?

Adler: Property owners weren’t motivated to sell because there was no equity in the property. Institutional investors preferred to hold on to assets as banks offered to extend loans rather than accept excessive ‘lowball’ offers. With no incentive to move these assets off the books, transaction volume declined significantly.

LeClaire: What’s your take on 2011. Are you optimistic?

Adler: Recent acquisitions are pointing to a narrowing of the gap between asking and bidding prices, indicating that buyers and sellers are being more realistic about the negotiation process. As lenders return to the market, debt is becoming more readily available for qualified borrowers, and property owners are more receptive to selling, we should see an upward trend in volume of transactions. With more properties expected to come on the market next year, it lends an air of optimism for more investment than was seen in 2010.

LeClaire: Where do you see the opportunities?


Adler: We see great investment opportunities in multi-tenant, management-intensive properties located in undervalued geographic markets that present greater upside for profitability. In fact, the company raised a $20-million closed-end discretionary fund to invest in properties in non-core markets throughout the Southeast and Mid-Atlantic states that provide “cash-on-cash” returns from inception.

LeClaire: What factors do you see influencing investments?

Adler: Property management and third-party services will continue to be key in the coming year. We believe that proactive, on-site property management and leasing allows us to unearth a property’s true value, and our strength as a property operator has been a major factor in our investment strategies. As product returns to the market in 2011, operation of a property will be as critical as capital investment in order to attract tenants, build-up occupancy, increase rental rates and generate higher net operating income for the property that will generate strong sales potential in the future.