Long overlooked in the past decade when a developer could do no wrong, asset managers are now the most important part of the firm, and the best strategy for an owner, to get their money back.

Thankfully, sanity seems to have returned to the real estate industry. Before a more rationale market takes over, the industry must focus on completing what's in the pipeline and moving that product. Therefore, developers must face the reality, and lenders and investors must be ready to step in.

This period will require asset managers to rise to the occasion. And rise they must, out of their office and into the battlefield. If you're an asset manager who has had to deal with the complexities of a weak market or you're an undercapitalized developer with a project in mid-construction here are a few tips:

  • Re-underwrite the deal
    Go back to the original underwriting. Know what the original break even and completion dates are, and know the sources and uses of capital. If you have supplemental collateral or are depending on a guarantee, check it all out as diligently as your primary asset. Values and balance sheets change. When dealing with approved land be sure that those approvals have been maintained and can be assigned to you. Developer's balance sheets are eroding rapidly, so know what they look like now and how they derived value.

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