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Understanding How To Unlock The Value In Today's Competitive
Investment Sales Market. |
By:
Mike Myatt |
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There is little doubt that we are currently experiencing one of
the most heated seller's markets in recent history. Today's
investment sales market has been reduced to an e-bay like
environment where retail brokerage houses simply put an asset up
for auction and wait for the buyers to circle like hungry
sharks.
Many will point to the increased flow of funds in the commercial capital markets creating a
demand-side frenzy that is causing a compression in cap rates
and escalating prices to all time highs as justifying current
market tactics. However while there is an element of truth
surrounding the logic contained in the previous sentence, I
believe it is simply easier for many buyers to blame the market
and follow the crowd rather than adapt their acquisitions plan.
This is evidenced by the fact that many institutional buyers
like REIT's, TIC syndicators or foreign investors seem content
to participate in the madness rather than seek alternate
investment strategies. The need to place funds seems to be
taking precedence over making good investment decisions for many
in today's market.
The real opportunities in today's market are not found by
following the herd mentality but can be found in the application
of any of the following strategies:
1. "Off-market" transactions: Seek out assets that are not
listed by retail brokerage firms. Hire an investment bank to
approach principal owners on a direct basis negotiating with
them on assets that are not publicly for sale.
2. Change Market Focus: Focus your acquisition strategies on
secondary and tertiary markets where there will be less
competition for assets. Additionally stay out of the hot markets
and look toward markets recovering from downturns.
3. Change Asset Class Focus: Rather than chasing multifamily and
retail properties look for opportunities in office, hospitality
and industrial asset classes.
4. Stay Away from Traditional Trophy Assets: If you must buy big
look for opportunistic plays that have higher vacancies, lease
roll-over risks, or financing issues. An asset doesn't need to
be located in New York, Chicago or Los Angeles or be fully
leased to constitute a trophy designation.
5. Look for Joint Venture or Recapitalization Opportunities:
Many of the best opportunities in today's market are not found
in out-right acquisitions. Explore joint ventures that will
allow you to co-invest with existing owners of assets in a
fashion that will allow them to free up trapped equity or fund
new developments.
6. Change Your Acquisition Process: Traditional acquisition time
frames that were competitive 12 months ago will leave you on the
outside looking in with today's frothy market conditions. Be
willing to make unsolicited offers, put up meaningful earnest
money deposits and close quickly.
In summary, we are experiencing quite a competitive sellers
market and the investment sales market is turning into
more of an e-bay type auction than a business transaction.
However, there are many real opportunities in today's market
that can be found when you change the way you look at the
investment sales market.
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Article Source: http://www.PopularArticles.com/article2115.html |
Article: Understanding how to unlock the value in today's competitive
investment sales market.
Author: Mike Myatt
Total Views: 26
Word Count: 452
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