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Stretching (or Over-reaching) on Deals

Having trouble putting money out, sustaining a decent yield? Who isn't? It's been a consistent theme too much capital chasing too little quality real estate product, and the smart money is holding onto stabilized, core product in the top-tier, 24-hour markets. So investment managers and private equity players find themselves stretching—their investment parameters, the range of markets they consider, the property types they seek, and the ultimate deals they do—to keep their clients and partners happy,…

By Jonathan D. Miller | Updated on July 01, 2014

Having trouble putting money out, sustaining a decent yield? Who isn’t? It’s been a consistent theme too much capital chasing too little quality real estate product, and the smart money is holding onto stabilized, core product in the top-tier, 24-hour markets.

So investment managers and private equity players find themselves stretching—their investment parameters, the range of markets they consider, the property types they seek, and the ultimate deals they do—to keep their clients and partners happy, and most of all to increase their short-term fee revenues. If you do not put money to work, the bottom line weakens and your investors start to look elsewhere. So what if the chronically slow growth U.S. economy lives off artificially-sustained low interest rates, consumers are hamstrung without easy credit, wages for most Americans have stagnated, corporate earnings really do not support stock prices, inflation for everyday items like food is rising, and the Middle East energy region (on which the world economy still depends) descends into a perilous state of greater dysfunction.     

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