Zoe Hughes

Retail REIT General Growth has collapsed, and private equity real estate is best positioned to pick up the pieces.

The real estate investment and development firm can appeal a US court ruling that would force it to repay millions of dollars in rent overcharges. The ruling had brought into question the strategy of converting rent stabilised apartments in New York to market rates.

Why the auction of the John Hancock Tower marks a very public end to Broadway Partners’ debt-driven strategy, and the start of a new era of bargains.

When private equity real estate firms previously considered debt origination they were primarily focused on mezzanine financing. However, increasingly attractive returns for senior positions are enticing some to climb further up the capital stack. PERE Magazine, April 2009 issue

The Boston skyscraper was sold for a reported $20.1m, plus the assumption of a $640.5m mortgage, after Broadway Partners defaulted on a loan. Broadway paid $1.3bn for the skyscraper and two other buildings in 2006.

There is a newfound sense of optimism among private equity real estate pros, even given the major challenges facing the industry.

More than half of all delegates at the PREA spring conference in Washington DC believe LPs will call for more separate accounts and fewer commingled funds. However, opportunistic strategies make the most sense in 2009.

The CEO of Allianz Real Estate Olivier Piani said lending in Europe won’t improve significantly until banks deal with their real estate assets. However, the PREA spring conference heard there’s more upside than downside to the current crisis.

The Lake Oswego, Oregon-based firm is targeting $200m for its Real Estate Distress Fund. The vehicle will focus on distressed multifamily apartments, particularly in the Sunbelt states.

Commercial property prices in Britain have fallen by 40% from their peak, however the office market felt the most pain with rents falling by 1.74% in February – three times greater than any other sector. The pace of decline in capital values though eased slightly.