The market for distressed assets is not living up to initial expectations. At the beginning of the pandemic, many expected a wave of opportunities deals to come to the market—much like following the 2008 Financial Crisis—but that has yet to happen. While some still expect to see more distress at the end of the year, the reality will likely be a shallow pool of distressed deals.

"I think that we thought we would see something more cataclysmic than we have in certain respects," Manny Grillo, a restructuring partner at Baker Botts, tells GlobeSt.com. "That doesn't mean that there haven't been a number of properties that haven't needed to be restructured, but a lot of what has occurred in the marketplace to this point has been the amend-and-extend variety rather than full-scale restructurings."

The hospitality sector has been the hardest hit by the pandemic, and ultimately has the most distressed opportunities for investors. That is especially true in major metros and business-serving properties. "The most activity is in hospitality. If you break down that particular segments into sub-segments, the properties that cater to a business clientele have seen the greatest degree of weakness because of the reduction in business travel," says Grillo. He adds that many events that were canceled prior to the pandemic have not been rebooked for this calendar year. Those properties are ultimately losing two years in revenue. That is one area where there could be a significant end-of-year boost in transaction volume.