Thursday, August 16, 2007

Thursday is Two-fer REIT Whammy Day! And what is private equity doing?

David Bodamer has not one but two posts about REIT funds and commercial mortgage REITs taking heavy hits. (By the way, if you like it here [and I know this sounds like a shameless, toadying plug and I don't mean it to be], you have to bookmark or link to David's blog. He's on my must-read list, and should be on yours if you care about commercial real estate.)

How low can they go? The investors can only take so much pain. And is this and the rest of what we have been seeing panic-driven, contagion-driven, both, neither...or are there other factors out there?

The other thing I want to know is how the real estate-driven private equity players are doing. I don't mean the big boys you read about in the paper; I mean the bread and butter people you only know about from being in the biz. If anyone, they might be okay so long as they have stuck to their general investment guidelines for doing deals. I know some are delving into development work because that is where the best returns are now, even though there may be a little more (calculated) risk.

I'll even bet a nickel that the more opportunistic funds, the people who want major league IRRs, probably have some money sitting on the sideline waiting for the must-come dip in prices so they can buy on the cheap, finance with slightly higher rates on a short-term loan and then refinance and/or flip when things calm down.


Jeff Brown said...

David - I'll bet negotiations are going on all over the country right now. We've been flying in under the radar for quite awhile.

It's nice to see a post telling the real story.

David Bodamer said...

Thanks for the nice compliment!

As you probably have figured, I'm also a regular reader of your blog as well. There's not too many of us blogging about commercial real estate. So I think it's important that we support each other's work.

David Stejkowski said...

David, I was quite surprised that so few people are blogging about this important and interesting field. Thanks for the compliments.