What distress? Dry powder piles up with few discounts in sight

first_img Full Name* Tags Share via Shortlink Share on FacebookShare on TwitterShare on LinkedinShare via Email Share via Shortlink Message* U.S. private equity funds had more than $250 billion to spend on commercial real estate loans as of March 23, according to Preqin, the news service reported. About $76 billion of that was earmarked for distressed debt.Still, investment funds are continuing to raise money or close on existing funds for real estate opportunities. Cerberus Capital Management closed a $2.8 billion opportunistic real estate fund Monday, surpassing its $2 billion target. Meanwhile, Oaktree Capital Management said it raised $4.7 billion for a real estate opportunities fund, exceeding its $3.5 billion goal.This comes as 30 percent of institutional investors are targeting distressed and opportunistic commercial real estate deals this year, according to a survey by CBRE.Investors might have to wait a while to see returns, if they ever do. JLL looked at $24 billion in potential debt deals last year, but only about $1.4 billion came to market, according to Sledge.[Bloomberg News] — Keith Larsen Contact Keith Larsen Email Address* Oaktree Capital CEO Jay Wintrob and Cerberus Capital CEO Steve Feinberg (Oaktree, Cerberus, iStock)After raising billions of dollars to spend on commercial real estate, distress investors are having a difficult time spending it.Despite projections of massive discounts in real estate prices, few have arisen. Banks have yet to write down loans and commercial property owners have had little incentive to sell.These factors, along with generous stimulus packages from the federal government, have led some investors “to push prices up and their yields down in order to simply deploy capital,” according to Will Sledge, senior managing director at JLL, Bloomberg News reported.Put another way, a lot of money was chasing a paucity of opportunities, creating a supply-and-demand dynamic that sustained pricing.ADVERTISEMENTRead moreThe art of the discounted dealBanks see CRE loan delinquencies hit 5-year highPricing gap stalls distressed asset investors for now Distressdistressed debtPrivate Equitylast_img read more

Grassley criticizes Corps of Engineers for handling of water releases

first_imgWASHINGTON — Leaders of water-inundated towns in southwest Iowa are blaming the U.S. Army Corps of Engineers for blundering decisions that may have contributed to the region’s widespread flooding.Iowa Senator Chuck Grassley says he “absolutely” will call for an inquiry into the Corps’ actions, like ordering the town of Hamburg to remove reinforcements from a levee which protected the town in the 2011 floods. “When a town was trying to help themselves and then have to take protection down and then get flooded like they have now, where it’s probably worse than it was in 2011,” Grassley says, “we have to have a complete review of the manual that governs all that.”The Corps is also being criticized for having radically boosted releases recently from Gavins Point Dam upriver on the Missouri River and for now vowing to cut back the flow when the damage is already done. Critics say it’s far too little, too late.”Now that this flooding is taking place, to have the Corps say that some of the dams, that they’re going to shut down releases right now as the flooding is happening, not being on top of it ahead of time, trying to anticipate things,” Grassley says. “It’s ridiculous.”Defenders of the Corps’ actions say it was the perfect storm of conditions that brought the unstoppable flooding, with frozen soil, a deep snowpack that melted quickly, and heavy rain showers. Grassley disagrees and says the Corps’ should have known better.”Anticipating weather ahead of time, they just didn’t take that into consideration,” Grassley says. “The tremendous rain and storms they recently had in Nebraska is a perfect example of being out in front of it instead of always being behind the curve.”Grassley says the Corps’ river management priority list includes several elements, like maintaining water levels for commercial and recreational boating, when he says the number-one concern should be flood prevention.last_img read more