New York and South Florida Remain Hottest Markets for Distressed Debt Real Estate Activity in 2013, According to Cole Schotz Real Estate Special Opportunities Poll
Outlook on the Commercial Real Estate and Debt Markets in 2013 Real-Time Poll Reveals Key Indicators for Year Ahead
NEW YORK -- Cole Schotz today announced the findings of its Outlook on the Commercial Real Estate and Debt Markets in 2013 Poll, which reveals that investment management funds still view New York and South Florida as the markets that will be most active in real estate deals in the year ahead. At an industry panel discussion led by Cole Schotz, the law firm conducted a real-time poll of representatives from the world’s leading investment firms who were in attendance to discuss the state of the commercial real estate and debt markets. The full report of findings is available online here.
In ranking geographic markets based on how much activity participants expected to see in 2013, on a scale of 1 to 10, New York ranked highest with an average 9.2 ranking, with South Florida ranked the second hottest market for 2013 with a 7.3 average ranking. Los Angeles, Boston, Dallas, Washington, D.C., and Las Vegas were all ranked above 5.0.
Trends in real estate dealmaking: CMBS activity to increase in 2013
Compared to 2012, 96% of the polled investment advisors responded that CMBS activity will increase in 2013, while 76% expect equity deals to increase, 64% expect the interest rate for CMBS loans to increase, and 60% of respondents anticipate an increase in opportunities to acquire debt from community, regional, and institutional banks. Interestingly, 68% of participants expect bankruptcy/foreclosure-driven deals to decrease in 2013 compared with 2012 activity, and 56% also anticipate a decrease in the cap-rate for commercial properties.
Despite industry predictions that combination equity-debt deals would decrease in 2013, 84% of participants in Cole Schotz’s real-time poll responded that they think there will in fact be more combination equity-debt deals in 2013 compared with 2012. Of the respondents, 76% said they think they will do a combination of both equity and debt deals in 2013, compared to 20% who responded that they would do only equity deals and the 4% who think they will do only debt deals.
Trends in fund raising: Foreign investors will be largest source of capital
In terms of fund raising, on a scale of one to ten with ten being very strong, respondents indicated that foreign investors, with an average ranking of 8.2, and family offices/high-net-worth individuals, with an average ranking of 7.6, would be the strongest for raising capital in 2013. Institutional money and friends and family were ranked not far behind.
The real-time Outlook on the Commercial Real Estate and Debt Markets in 2013 Poll was conducted using presentation testing dials and analysis tools at the “Panel Discussion on the Commercial Real Estate and Debt Markets,” hosted by the Cole Schotz Real Estate Special Opportunities Group at The Penn Club in New York City on March 21, 2013. Featured panelists and event attendees, who participated in the real-time poll, were executives and representatives from leading investment firms including The Savanna Fund, Torchlight Investors, Canyon Capital Realty Advisors LLC, and Cantor Commercial Real Estate, among others.
Leo Leyva, Department Co-Chair and Partner, Real Estate Special Opportunities Group, Cole Schotz
The Cole Schotz Outlook on the Commercial Real Estate and Debt Markets Poll provides insights from leading investment firms in an effort to better understand distressed debt deals for the year ahead. We wanted to take the opportunity to gather data and predictions from the attendees at our panel event while they were all in one room, and we were pleased the data we were able to gather through the real-time poll is extremely valuable for the industry. Cole Schotz formed the Real Estate Special Opportunities Group to respond to the growing number of distressed debt acquisitions, restructurings, and workouts and to build upon our experience working on these very deals for over 15 years. The panel discussion and real-time poll further demonstrate our commitment to the commercial real estate and debt markets, and we are confident that the data collected in this poll will be a helpful resource for the industry in making decisions in the year ahead.”
"We were particularly surprised that respondents did not rank Washington, D.C. as a hotter geographic market for real estate deals, as we are seeing a lot of activity already there and anticipate more."
Leo Leyva from Cole Schotz’s Real Estate Special Opportunities Group is available to speak with the media further about the poll. The real-time poll methodology and full report is accessible online here.
About Cole Schotz
The Cole Schotz Real Estate Opportunities Group focuses on distressed debt acquisitions, restructurings, and workouts, combining lawyers from Cole Schotz’s real estate, litigation, bankruptcy, and corporate departments. Cole Schotz formally launched the group almost one year ago after more than 15 years of working on these deals.
Cole Schotz serves clients throughout the United States with offices in New York, New Jersey, Delaware, Maryland, and Texas. The firm represents hundreds of closely-held businesses and individuals – many for decades – as well as Fortune 500 companies. Founded in 1928, the firm has grown to 114 attorneys who work in the following primary areas of practice: Bankruptcy & Corporate Restructuring; Construction Services; Corporate; Finance & Business Transactions; Employment Law; Environmental Law; Intellectual Property; Litigation; Real Estate; Real Estate Special Opportunities; Tax; Trusts & Estates; and White Collar Defense & Investigations.
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