Ask Herrick, Feinstein LP partner Gary Eisenberg what the distressed landscape will look like in 2011, and he recalls the movie Rocky III and the sneering response of Clubber Lang, the hulking boxer played by Mr. T, to a reporter’s query about what Rocky Balboa could expect from the two fighters’ upcoming match. “He curled his lips and said, ‘Pain,’” Eisenberg relates. “The question is, whose pain? Somebody’s pain may well be someone else’s gain.”
Another unknown continues to be the extent to which investment prospects will materialize. At the Bloomberg Real Estate Briefing in November, Daniel Neidich, CEO of Dune Real Estate Partners in New York City, said there would be distressed opportunities to come. The question, he noted, is “whether you’re a vulture or a pigeon.”
Although the next few years will see hundreds of billions of dollars in commercial mortgages and construction/development loans mature each year, totaling more than $1.6 trillion by 2014, it’s not at all clear that this will lead to a flood of distressed assets, said panelist Neil Bluhm at the recent 43rd Annual Conference on Capital Markets in Real Estate sponsored by the New York University Schack Institute. “The product is coming out much more slowly and in a rational way” compared to the 1990s, said Bluhm, managing principal of Chicago-based Walton Street Capital. But from the vantage point of 2015, Neidich predicted, the kinds of opportunities becoming available in the next two or three years will look like “great, vintage deals.”
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