The real estate market’s struggles are front and center as we watch an increasing number of property owners struggle to fill occupancy-challenged buildings or get caught in the web of high interest rates and stringent lending regulations. More than a few prominent buildings have ended up in the hands of special servicers. But now, some Wall Street firms are setting their sights on acquiring struggling commercial properties through new investment funds. According to the Wall Street Journal, the likes of Cohen & Steers, Goldman Sachs, EQT Exeter, and BGO are in the midst of raising money, lots of money to gobble up troubled properties in the office, multifamily, and retail sectors.
The billions of dollars in fundraising will allow these Wall Street names to buy properties that likely would have traded hands by now if not for the persistent gap between the property owners expectations and the amount potential buyers are willing to pay. More banks have been trying to work with borrowers on renegotiating real estate-backed loans, but there have still been numerous sets of keys returned to borrowers, so the timing might be right for investment funds to pounce. These investment giants will possess the cash to have their pick of any number of properties that could benefit from a cash infusion or just time to wait for a market recovery. It is doubtful, however, that sellers will be any more inclined to offer a bargain-basement price on their properties to a big Wall Street fund. So, the massive property discounts many investors have been hoping for during this real estate cycle could still not materialize.