As the New Year kicks off, many investors are focusing on real estate funds. Comparing the first fifteen days of January 2010 with the same period a year earlier, there has been almost four times the number of investors interested in the real estate sector.
An analysis of BHA mandates indicates that of the investors seeking real estate opportunities, more than 60 percent are looking at funds focused on the U.S. That same percentage of investors has set their sights on the commercial real estate sector. Although there are many reasons for this, it is partly due to the $1 trillion in U.S. commercial real estate loans that will mature between 2010 and 2013.1 As loans come due, managers looking to profit from distressed commercial properties will find many opportunities.
One such investor, an American wealth advisory firm with offices on the East Coast, recently expressed its interest in distressed real estate opportunities in the U.S. The firm believes that although illiquid, the risk/return profile for these types of funds makes them exceedingly attractive as long-term investments. Another investor, a California-based fund of real estate funds, is also seeking real estate funds focused on distressed opportunities in the U.S. However, the fund is looking for more exposure to the West Coast as it believes the margin of profit will be greater than that of investments on the East Coast.
Although 2010 is already proving to be an exciting year for all real estate funds, it is the commercial sector that is going to be the focal point of real estate fund managers and investors. Both will act on the uncertainty in the market and look to profit from the stress that the past few years have put on real estate as a whole.?
1 http://www.huffingtonpost.com/ … commercial-real-estate-de_n_205047.html.
