Capitalizing on Distress: Turmoil and Tightening in the Debt Markets Create Opportunities
The subprime mortgage crisis has sent the U.S. residential market into a tailspin, and subsequent contagion has caused commercial real estate capital markets and investors around the globe to pause to reassess and reprice risk. However, opportunity funds, pension funds and foreign investors have plenty of capital to invest. For those investors who can identify the opportunities and act swiftly, the current market offers attractive values, especially on the debt side and in residential land.
It was a distressing year in 2007, with the subprime meltdown leading to a huge credit crisis on top of a severe housing downturn. Fear permeated the debt markets, deal flow slowed to a trickle, and there’s still no real end in sight. “We’re experiencing an unprecedented credit crunch,” says Robert Davis, CEO of Triton Pacific Capital. “Banks, mortgage companies and homebuilders are taking huge hits and, i