Word: reals
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Dates: during 2000-2009
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...flurry of private-equity players are turning to IPOs to capture what they believe could be the biggest buying bonanza of troubled real estate assets since the early 1990s...
Since June, at least eight entities, including such high-profile names as Apollo Global Management, Colony Capital LLC and Starwood Capital, have filed with the Securities and Exchange Commission to launch initial public offerings of new real estate investment trusts (REITs). The plan is to use proceeds from the IPOs as well as government financing programs to either purchase or originate real estate loans and mortgage-related securities on the cheap. (See pictures of high-end homes that won't sell...
...similarities are huge, except this time the opportunities seem to be on the debt side as opposed to the equity side," says Bob Bach, chief economist with Grubb & Ellis Co., a commercial real estate services and investment company...
Private-equity players are betting they'll be able to snap up the securities at bargain-basement prices. After all, the debt will come due amid rising unemployment and a deepening meltdown in the commercial real estate market...
Bach expects the jobless rate to top the 10% mark, office rents to plunge another 5% to 10% and vacancies in commercial real estate to exceed 20% by the middle of 2010 - surpassing the 18% vacancy peak hit during the early 1990s crisis. The doom-and-gloom scenario will likely lead to higher default rates on commercial property loans held by banks and those pooled into mortgage-backed securities...