John Maynard Keynes, if alive today, might have said the same thing about the big commercial real estate investors buying into the 2005-2007 commercial real estate investment bubble that he famously said about bankers:

A sound banker alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him.

The stampeding herd of CRE investors during the bubble included the “smartest” Blue Chip Funds in the industry happily back slapping each other and sharing the same delusional beliefs. The hapless limited partners caught up in the investor frenzy would soon lose any paper profits and substantial portions of their invested equity.

Hate to be that guy, but why do you think there were no media “lynchings” of CRE industry leaders during the Great Recession?

Sure, the investment banking chieftains like Lloyd Blankfein were tarred and feathered, but the real estate gurus at the Blue Chip Real Estate Investment Fund were largely unscathed. Mark Walsh, the former head of real estate at Lehman Brothers and perhaps the biggest culprit in that firm’s demise, was asked by some of the real estate investors fleeced by Lehman to return as the head of a workout group for the real estate portfolio. Talk about the battered wife syndrome.

What one top commercial real estate broker said of Lehman’s real estate finance group could have been said about Morgan Stanley, BlackRock and other Blue Chip Investment Firms: “They were totally spreadsheet-oriented, analysis-oriented, with no understanding of the industry.”