Today’s Competitive Investment Sales Market – Unlocking the Value
Commercial Real Estate Investment Bank Pacific Security Capital defines how to unlock the value in today’s competitive investment sales market.
Beaverton, OR (PRWEB) May 24, 2005 -- http://www.pacificsecuritycapital.com - Pacific Security
Capital, a leading commercial real estate investment bank, focuses on creating
value in today’s competitive investment sales market and identifies valuable
strategies to follow to achieve success in investments.
Mike Myatt,
executive managing director, Pacific Security Capital shares “there is little
doubt that we are currently experiencing one of the most heated sellers markets
in recent history.” Myatt continues, “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.
Myatt adds that, “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 herd rather than adapt their
acquisitions plan.”
The follow the herd mentality 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 sales 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 investment sales 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, of 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 investment 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.
About Pacific Security Capital (PSC)
Pacific
Security Capital (“PSC”) is a leading commercial real estate investment bank and
real estate capital markets expert. Pacific Security Capital provides commercial
real estate loans, structured finance, investment sales and advisory services
for commercial real estate projects requiring more than $3MM in financing.
Pacific Security Capital is headquartered in Portland, Oregon with other
locations across the United States. More information about the company can be
found at www.PacificSecurityCapital.com.
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Source : http://www.prweb.com/releases/2005/5/prweb243951.htm