SHERMAN OAKS, CA-It is evident that many private equity fundsare itching to pull the trigger and are buying distressed realestate, according to locally-based Robert Leveen, a senior vicepresident of Lee & Associates investment services group. Leveenwas recently appointed to the company’s investment group tospecialize in the acquisition and disposition of multifamilyproperties throughout Southern California.

GlobeSt.com What is the current state of theinvestment market as we wait for a real recovery—or a doubledip?

Leveen: The investment market isseeing signs of life. There are many private equity funds formedsolely for the purpose of acquiring distressed commercial realestate. It is evident that they are itching to pull the trigger andare buying. Their underwriting points to a recovering economy andthe opportunity to add value to distressed property and dispose ofit at a lower CAP rate. The national market is so vast, I cannotcomment on what is occurring. In large coastal urban centers, whereCRE is always at a premium, many seasoned investors look to otherstates for the right deal. Many California investors were buying inArizona and Las Vegas for several years. Those markets overheatedand with the onset of the recession, those areas took a hugehit. Then, several of my clients turned to Texas. Thateconomy has better withstood the recession. But, there areplenty of investors who went there and have lost their properties.Recently, in Cincinnati, a 260-unit distressed property was notattracting the interest of local investors in the tri-state area. Ibrought in a Los Angeles-based investor in a 1033 exchange, whoacquired it all cash at less than 50% of the outstanding debt.Although distressed as a result of defaulting on LIHTC bonds, theproperty had been stabilized by the receiver and was generatingsignificant income. My client saw the benefit of long-termownership of a lower income property, especially because it hadbeen rehabbed by the prior owner. Assets like these are great toacquire as the rehabilitation costs were borne by the prior ownerand the foreclosing lender. A buyer can acquire these types ofassets at significant discounts, which were not available over thelast few years.