Investors Poised to Move Into Real Estate Even as Crisis Spreads, Expert Says
By: Darrell Delamaide
The distressed conditions that have plagued residential real estate are now spreading to commercial real estate, but that is setting the stage for more investor capital to move into the sector, according to a restructuring expert. Mark Shapiro, head of global restructuring and finance at Barclays Capital, said the new investment will flow into “the whole gamut” of real estate opportunities, according to a report from Reuters on the Reuters Restructuring Summit in New York.
Shapiro’s remarks came as Federal Reserve officials warned of the crisis overtaking commercial real estate and the risks that sector poses for economic recovery. A growing number of developers and property owners are expected to default in the next couple of years because banks hoping to maintain sufficient capital to please regulators will be unwilling to roll over their debt or issue new financing, Reuters reported. Even so, Shapiro said investors he is talking to are thinking of shifting capital into real estate, “because that’s where they see the opportunities.” Shapiro acknowledged “there is no market right now” and “no depth in the capital markets right now” for many investors to dive into real estate, but, he said, that could change. “What’s happening in distressed (investing) is that the more opportunistic investors (are) willing to take the risks around what is still a situation that still lacks visibility, i.e. real estate, over the next couple of years,” Reuters quote him as saying.
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