Private Equity's Sideways Entrance

Whether distress commercial real estate investors realize it or not, the various companies that C-III Capital Partners LLC is acquiring represents a milestone for this part of the industry. It is easy to see why the message-that is, growth in distressed asset transactions is coming-might be lost. After all, New York City-based CIII is intent on building out a diversified, full service real estate company. However, the bottom line for distressed asset investors is indeed that C-III and other private equity-backed funds are acquiring special servicers and their assets and bringing complementary business lines to the table while they’re at it. They reason they’re moving into this space is because they see the business, and the fees they can generate from it, as finally poised for growth.

Not that the industry is moving wholesale in this direction. Some companies are charging ahead full force toward this model, while others are approaching it from different angles. C-III, for the moment, appears to be the most aggressive of all these firms.