One of the unique ways to make money in CRE is to arbitrage the difference in pricing of certain assets from valuations in the REIT market and similar valuations in the private real estate market. That is according to Joseph Ori, executive managing director of Paramount Capital Corp. in this exclusive commentary on the subject. According to Ori, about every seven to 10 years, the valuation of private commercial real estate assets diverges from their valuation in public REITs.
The views expressed below are Ori's own.
Right after the Great Recession and through about 2015, the CRE assets held by public REITs was valued at higher prices and lower cap rates than the same or similar assets owned in the private market. This mispricing was very prevalent in apartment REITs that traded at much higher values and lower cap rates of 4%-5% than comparable private apartment market valuations. Apartment REIT values have since declined, primarily due to a large amount of new supply and this arbitrage is no longer available.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
