Participated this morning in the monthly Columbia Business School RE Circle, the Paul Milstein Center for Real Estate International Real Estate Alumni Meeting: Updates on RE Markets Around the World.
Participants confirmed my opinions that:
Sellers are looking for 4-4.5 caps and buyers looking for 5-5.5 caps – indicating a 20% decline in value and too far apart to even haggle.
Funds that were lending at 8% and leveraging up with an A-piece from a bank can’t cause banks now charging 8%.
Lots of money sitting on the sidelines and more funds being raised with nowhere to go.
Equity funds raising money for debt funds to play lower down on the LTV.
Only asset class that’s optimistic is single family.
Values down 20% and market won’t start clearing for 6 months or so.
Banks/Special Servicers will cooperate to avoid a panic.
Mezz/Pref Equity that’s really Equity + Hope Note is the future.