Changing Times, Changing Definitions: Recent Scars Change Risk Appetite and Strategies and Maybe Even the Definition of High Return
Real estate investments that proffer high returns will always have appeal. Unfortunately, the siren song of that elusive alpha sometimes leads to dubious decision making and warped perceptions of risk. That became all too evident at the peak of the most recent cycle when leverage — and the overuse thereof — became the primary tool of opportunistic fund managers and investors. In the post–Lehman Bros bankruptcy world, however, investors are faced with a very different investment environment. Not only is the availability of debt vastly different from the glory days of financial engineering, but the mindset of many institutional investors has also changed. It’s not as if the high-return investor has disappeared; it’s more that the game has changed and so too, perhaps, has the definition of high return.
When the financial world was spiralling