When the financing and real estate markets decoupled in 2008, many investors looked at the final years of the last real estate crash in 1990-1992 for answers. Those were the days when the RTC dumped assets en masse, then investors came in and eventually made fortunes. Many were not even experienced in real estate but had liquidity and were able to buy distressed assets for as low as 10 cents on the dollar. This time around, a myriad of funds set up promising lofty returns to attract investors, but as the downturn persisted, much to the dismay of fund managers and investors, the lenders haven’t dumped assets to any great degree. The waiting game and lack of for-sale product has forced some funds to accept lower returns, while others have been sidelined or shut down.

Today, it’s all about capital competing for a limited supply of assets hitting the market. In order to be a successful bidder, many investors are now reaching for assets and even plugging in lease-up assumptions to make the numbers work. For example, when the market downturn initially occurred it was common for an investor to cap in-place income to determine price. In order to compete, many investors are pricing in future upside, resulting in cap-rate compression and higher asset prices.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.



Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2023 ALM Global, LLC. All Rights Reserved.