By:Abby Corbett, Head of Investor Insights • Cushman & Wakefield - United States
Understanding market dynamics is crucial for investors aiming to maximize returns.
(May 17, 2024) -- Cushman & Wakefield's latest piece from Abby Corbett, Global Head of Investor Insights, unpacks 2024 transaction types, predicted buyers and sellers, and how the direction of capital flows will impact future investment decisions.
Explore the questions below or dive deeper into the full report to get a better understanding on how to capitalize on opportunities that may arise during a transitioning real estate market.
What Types of Activity Are Likely to Drive the Market Throughout 2024?
Types of activity will take the form of:
- Direct asset purchases/sales: In the near term, this period of illiquidity is allowing private capital to step into a significantly less competitive market today and directly acquire assets.
- Recapitalizations: This period also offers a significant opportunity for equity to come in and recapitalize assets where existing ownership doesn’t want to part with them entirely.
- Lender-facilitated note sales: Private equity capital can purchase distressed loans/note sales.
- Diversification of debt sources: Finally, private debt funds can also enter an illiquid market today and effectively take advantage of the distress throughout the marketplace rather than the distress of a given asset.
DIVE DEEPER ON ACTIVITY TYPES IN THE FULL REPORT >>
Where Do You Think We Will See Active Capital Flows on the Sell Side? Who Will Be Sellers?
- Owners facing necessity-based conditions are finally coming to terms with the higher cost of capital environment.
- Sellers are facing debt maturities, particularly those that bought at the peak with shorter-term, bridge-loan financing.
- ODCE funds and non-traded REITs are facing elevated redemption and withdrawal requests.
- Even private funds that aren’t experiencing elevated redemptions might still decide to meet the market if they are experiencing declining portfolio cash flows and property valuations.
- Closed-end funds and separate accounts with assets that have achieved business plans, looking to liquidate and get their promotes.
DIVE DEEPER ON THE SELL SIDE IN THE FULL REPORT >>
Where Do You Think We Will See Active Capital Flows on the Buy Side? Who Will Be Buyers?
- Private capital (unlevered) buyers who are seeking to capitalize on this “window” of dislocation.
- Investors who are still interested in balancing (and rebalancing) their portfolios into higher-growth or different sectors or markets to ensure diversification.
- Investors who recognize downturns, periods of illiquidity, and dislocation create attractive vintage years for investment.
- Opportunistic and value-added investors who have enough conviction and do not want to wait until there is a clear inflection.
- REITs will continue to exercise their advantageous access (unsecured capital) to grow their portfolios and businesses strategically.
- Entity-level merger and acquisition activity.
- Private capital buyers are active in smaller deals.
- Holders of note sales, not just asset sales, because they are likely to drive improvements in price discovery and aid the distress process overall.
DIVE DEEPER ON THE BUY SIDE IN THE FULL REPORT >>