Opportunities For Real Estate Investment Today by Tom Barrack of Colony Capital

Tom Barrack over at Colony Capital put up a nice presentation of where he sees the opportunities for real estate investment in the current market. While Colony is geared to serving their large institutional investors, those of us operating on a smaller scale can benefit from Tom’s insights as well.

My Exec Sum of the opportunities he sees that I think will impact smaller investors in North America (and my comments in parentheses):

  • Commercial and residential real estate are great investments today because equities and debt are mispriced and the economy is regaining its feet. (There will be competition however).
  • Distressed debt in the US is diminishing but they are continuing to resolve non-performing assets (which can create deals for long term holders as these turned around assets come back to the market).
  • Single family residential for rent housing is stabilizing and becoming a institutional asset class (which can provide exits for those who have built portfolios of these properties).
  • Mezzanine debt and what he calls ‘stretched senior debt’ is becoming more available for value add & opportunistic deals because institutional investors such as pension funds need the extra yield (it will be easier to finance turnaround commercial properties at higher LTVs).
Investment opportunities for commercial real estate investors in North America
Source: Tom Barrack at Colony Capital

The State of US Commercial Real Estate, Single Family and Apartment Building Investment Markets. By Tom Barrack, Colony Capital

Tom Barrack of Colony Capital on what’s really happening in US real estate from an investor’s perspective. The clearest, most cogent look at the state of commercial, multifamily and single family markets today and where the opportunities are. The first five and a half minutes is about Europe and the bottom line there is don’t but after that it is all gold. If Tom wanted to be one of those real estate ‘gurus’ he could package this video with a big notebook and some advertising and sell it for $10,000- and it would be better than any of the other stuff out there. And you get it for free. I’ve watched three times and get an extra little nugget each time.

The state of real estate in the US, commercial, single family and apartment building investment
Click on the image to view the Bloomberg video.

The big takeaway for me is that (temporarily at least) Continue reading The State of US Commercial Real Estate, Single Family and Apartment Building Investment Markets. By Tom Barrack, Colony Capital

How to Structure Apartment Building Investment Partnerships by Brian Ward of TCG Capital.

MHN Online has a nice piece out this morning talking about what institutional and private equity equity providers are looking for in their apartment building investment deals. According to Brian Ward, CIO of TCG Capital Markets, the requirements are much tighter than just a few years ago. Here are the high points:

  • Align the style and needs of the capital source with the operator. A long term operator shouldn’t be matched up with private equity that needs short term holds to clear their return hurdles.
  • Equity capital today generally comes in two two types: preferred equity or joint venture (See the table linked in the article for a good breakout of when to use each).
  • Blind pools are very difficult to get funded today —even the best and most sophisticated operators have had trouble executing this type of equity raise.
  • There must be local knowledge on the management team, both lenders and investors want their operators close by.
  • Operators must have Continue reading How to Structure Apartment Building Investment Partnerships by Brian Ward of TCG Capital.

Clash of housing bottom fairy tales: Big Bad Wolves v. Robin Hood Investors.

My friend and fellow real estate investor Mei was asking about competition for single family REOs from big institutional players buying them at the courthouse as in the Bloomberg article here. The article profiles Waypoint, a Southern California real estate investing outfit that has developed some great technology to facilitate buying and leasing REOs. Check out Waypoint’s website, it’s the best example I’ve seen of the lease/option, credit repair, rent-to-own strategy for real estate investors.

Will REOs to Rentals compete with Apartment Building Investments

It is a great question and one that I’d been wondering about too. Just so happens I was meeting with one of my private equity clients last week and we had a long conversation about that very subject. My client is the real estate/mortgage specialist at a 50B firm and they’ve been trying to crack this market profitably for about a year. Here’s the bottom line: Private equity needs to earn Continue reading Clash of housing bottom fairy tales: Big Bad Wolves v. Robin Hood Investors.