By Les Shaver
Over the last decade, a lot of funds formed, anticipating a downturn in commercial real estate. In March, as Coronavirus shutdowns spread across the country, that moment arrived.
“Before the pandemic, everybody kept saying, 'Oh, we're in the ninth inning [of the cycle],'” says Michael T. Fay, principal, managing director and global head of Avison Young's asset resolution team. “That has been going on for four or five years. All of a sudden, the pandemic hit and a lot of these groups were in the middle of raising money or had money.”
With the federal government pumping money into the economy, Fay says there is more capital in the market now than in previous downturns. This capital manifests itself in opportunistic funds, distressed funds and mezzanine equity loans, among many other things. Right now, funds are holding onto this cash. “There are a lot of people on the sidelines right now sitting on cash,” Fay says.
Some of the groups who are sitting on cash are looking at ways of entering the market as lenders. Read more.