In the November/December issue of Real Estate Portfolio, REITs and some of their respective positions towards distressed assets is examined by Lynn Novelli. As we have been observing commercial real estate assets fall in price, REITs, many with fresh capital, are beginning to aquire distressed real estate and debt. John Paulson, the noted hedge fund manager is quoted as saying "distressed assets offer the best investment opportunities this year." We agree that many of these assets do represent an excellent opportunity and more should be arriving in 2010.

As Novelli finds,REITs that had been previously overleveraged have cleaned up their balance sheets significantly and will now be ready to pounce on these assets as they become available. Listed RIETs have raised over 22 billion in equity this year. As we have noted multiple times, some of these assets have yet to come to market. Investors are teed up and ready but the product offerings have been sparce. Eventually it will happen however but patience is a virtue, especially for getting greater clarity on what a reasonable price to pay for these assets are. On the horizon, it looks like 2010 might be an exciting year where we can actually see some sizeable commercial transactions occur.

Real Estate Portfolio article click here.