Bubble-burst provides opportunity

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Nationally, the distressed commercial real estate trend began months — even years — ago as Wall Street and savvy lenders watched the real estate bubble begin to burst.

The Wall Street Journal, CNNMoney.com, the Wharton School of Business’ Knowledge@Wharton.com and Bloomberg.com have trumpeted the promising opportunities emerging from recession-clobbered shopping centers, multifamily, office and industrial buildings.

In a June 5 online story, for example, Bloomberg  reporter Brian Louis described the Starwood Property Trust Inc., which plans to “originate and invest in commercial real estate mortgages, and raise as much as $500 million in an initial public offering” to buy distressed commercial loans and provide financing for commercial property.

“The next five years will be one of the most attractive real estate investment periods in the past 50 years … We believe that there will be a significant supply of distressed investment opportunities from sellers and equity sponsors of real estate, including national and regional banks, individuals, insurance companies, finance companies, fund managers and other institutions,” Starwood said in its SEC filing application.

Realty Times contributor and veteran Certified Commercial and Investment Member broker Peter Mosca might have described it best in his June 15 blog post:

“I urge you to take advantage of this fundamental transformation taking place in real estate,” he wrote. “Get off the sidelines and onto the playing field … You should not wait (any) longer for the market to bottom out.  It has, and savvy investors — from niche entrepreneurial investors to huge bond fund managers — are eyeing the increasingly troubled commercial real estate market as a goldmine.”

And bargains there are.

In a July 6 story for the Atlanta Chronicle, Larry Gellerstedt, CEO of New Cousins Properties Inc., said banks are already showing signs they are ready to sell their troubled assets — “a move that will expose how far prices have fallen since the real estate crisis began and create extraordinary bargains.”

“You may see some (trade) as low as 20 cents on the dollar,” he said. “This is going to be a slow recovery, but it is also going to present unprecedented opportunities.” he said.