IMN Real Estate Forum: Opportunities to Invest in Distressed Commercial Real Estate

Yesterday, we attended Day One of IMN's 10th Anniversary US Real Estate Opportunity & Private Fund Investing Forum in New York City. The event is oriented toward the real estate fund, developer, and LP communities. Conference organizers relayed to us that approximately 900 persons picked up badges yesterday, down approximately 25% from last year, which we believe is a good showing considering the environment. As a point of comparison, we note that Gartner, Inc. (IT) reported that 1Q09 attendees declined 46% Y/Y for 12 events (unchanged Y/Y) to 2,858. Clearly, many persons remain keenly interested in figuring out how to work through current commercial real estate challenges and best participate in distressed opportunities.

The IMN Forum covered virtually all topics facing the commercial real estate industry. Key takeaways include the following: (1) conflicting view that we’re both entering a period of tremendous buying opportunities, yet also a long way from the bottom as mountains of debt come due and can’t be refinanced amidst deteriorating fundamentals; (2) government support to financial institutions could be delaying distressed sales and preventing market clearing prices; (3) reluctance of note holders (e.g. banks) to take losses (related to point #2); (4) property deal flows near all-time lows, although perhaps somewhat better than several months ago; (5) not surprisingly, fundraising is difficult and fund structures are changing; and, (6) well capitalized REITs may be relatively better positioned to lead the way through the next several years.

We’ll expand on our key takeaways following Day Two of the Forum and relay how certain of the key messages extend to public market real estate investing. From a high level, commentary can be applied to REITs across asset classes, including office REITs Boston Properties (BXP) and SL Green (SLG), retail REITs CBL & Associates (CBL) and Pennsylvania REIT (PEI), and multifamily REITs Colonial Properties Trust (CLP) and AvalonBay (AVB).

Disclosure: No positions.

The author attended the US Real Estate Opportunity & Private Fund Investing Forum courtesy of Seeking Alpha. All Seeking Alpha authors are eligible to attend upcoming conferences for free.

Comments

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[Rhino Realty:]

Jeffrey - Thanks for the conference update...as a CRE 20 year advisor, I see every asset class experiencing varied distress. Also, markets vary. Currently I see mutlit-tenant retail (ie shopping centers) experiencing most distress. Likewise, I see the best buying opportunities in single tenant investment grade retail. The panic has created some amazing buys...for example, I saw a new Walgreen in a major market for sale this week with an "ask" price of 8%....keep up the good work!

Jun 13 11:37 AM

[Old Trader:]

Rhino,

Agreed..and is why I'm still holding O in my core portfolio, though I've lightened the position a bit.


On Jun 13 11:37 AM Rhino Realty wrote:

> Jeffrey - Thanks for the conference update...as a CRE 20 year advisor,
> I see every asset class experiencing varied distress. Also, markets
> vary. Currently I see mutlit-tenant retail (ie shopping centers)
> experiencing most distress. Likewise, I see the best buying opportunities
> in single tenant investment grade retail. The panic has created some
> amazing buys...for example, I saw a new Walgreen in a major market
> for sale this week with an "ask" price of 8%....keep up the good
> work!

Jun 13 07:48 PM

[Old Trader:]

Rhino,

Agreed..and is why I'm still holding O in my core portfolio, though I've lightened the position a bit.


On Jun 13 11:37 AM Rhino Realty wrote:

> Jeffrey - Thanks for the conference update...as a CRE 20 year advisor,
> I see every asset class experiencing varied distress. Also, markets
> vary. Currently I see mutlit-tenant retail (ie shopping centers)
> experiencing most distress. Likewise, I see the best buying opportunities
> in single tenant investment grade retail. The panic has created some
> amazing buys...for example, I saw a new Walgreen in a major market
> for sale this week with an "ask" price of 8%....keep up the good
> work!

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