Thanks to the Fed, the workout business and restructure business is almost done and people engaged in those endeavors are moving on. The major advisory groups focused on restructuring advice, bankruptcy and related matters are being disbanded and reassigned to other roles. Bankruptcy attorneys focused on real estate are idle and looking for new litigation to occupy their time. Funds and investors seeking distressed deals are struggling to find anything that makes economic sense or is worth buying. Mostly properties are now over priced, too old and costly to renovate, or just badly located and hopeless. If you want exterior corridor roadside motels there are some, but who wants them. Office buildings in very secondary cities that cannot command decent rent can be found, but who wants them unless the price is very low and you are a local operator. In summary, the distressed game is essentially done and now it is mainly foreign capital paying cash at too high cap rates in new York, San Francisco, LA and Washington that drives many large transactions. Other deals are heavily dependant on the Fed keeping rates unrealistically low.

Most investors I speak to say they buy things where they can get 4% or sometimes lower debt, buy at an 8% cap and make a spread on current return. Most of the more sophisticated understand there is not a lot of likelihood of a big capital gain when they sell since rates will go up and cap rates will follow. They are seeking a current return in the 12%-15% range, and maybe a tiny pop at sales. At least we seem to have gotten over the legend of everything needs to make a 20% IRR or it is not acceptable, now that many learned just because their model says 20%+ return does not make it so, I continue to enjoy talking to my clients and friends who do deals on experience getting their hands dirty, and not based on some MBA’s version of spreadsheets based on unreality.

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?


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from 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 now!

  • Free unlimited access to'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 and

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.