The current economic downturn and the global financial credit crisis have impacted asset classes in all regions around the world, and the real estate sector has not been immune. Nonetheless, investment strategies targeting distressed investments are in vogue, and a secondary investment strategy will be a major theme for 2009 and beyond.

THE DILEMMA

The value decline in public equities and other publicly traded asset classes has greatly increased certain institutional investors’ relative exposure to real estate. Whereas during the past few years many institutional investors were chasing their allocation to real estate, those that were more aggressive at deploying capital now find themselves at or above their targeted allocation. Although it is widely recognized that changes in private real estate valuations lag changes occurring within the public markets, new capital for traditional real estate investments may be temporarily sidelined pending how long