Publications

- June 1, 2020: Vol. 32, Number 6

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Real estate fund recapitalizations, redux: When bad balance sheets happen to good managers

by Jeffrey Giller

In some ways, the global financial crisis seems like yesterday; in other ways, it feels like it was ages ago. “Stay alive till ’95” was our battle cry — wait, no, that was from the savings-and-loan crisis three decades ago. Time does fly.

With the inevitable real estate market crash we’re now staring in the face as a result of the COVID-19 pandemic, this will be the second major real estate recession for our colleagues starting to show strands of gray hair, and the third for those of us truly graying or gray who have gone through both the S&L and global financial crises.

Until March, I was certain we had another five to seven years before the next major downturn. The global economy was in good shape, real estate operating fundamentals were strong, supply was in check, and properties were generally not over-levered. Despite conventional wisdom that up cycles only run for seven or eight years and we were due for a market correction, I

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