The market is shaking loose

Real estate can be a little like hunting. Seasoned investors stay patient and disciplined, then strike when the moment is right.

 

2023 was a quiet year in which Alliance did fewer deals than we have for a long time. This year is likely to be very different.

 

Last year, rising interest rates meant lower asset valuations. But many property owners resisted lowering their prices. Now, after holding on as long as they could, they’re turning into motivated sellers who will take a lower price.

 

Over $3.1 trillion of commercial real estate loans are coming due this year. A lot of properties will need to be refinanced at higher interest rates, or their owners need to sell. Some of these properties are headed into default, which will turn their lenders into extra motivated sellers.

 

With sellers starting to accept reality, the wide bid-ask spreads we saw last year are narrowing. Transaction volumes are increasing, and so are cap rates (roughly the ratio of property income to market value).

 

For Alliance, last year’s patience is becoming this year’s dry powder. We have a fund of investor capital, ready to deploy on stellar deals.

 

At Alliance, we can hunt for absolutely killer deals. We don’t need to take a volume of “decent” deals to get capital out the door, and we don’t need to worry about moving the market.  

 

We have strict criteria, and only go after properties that are winners. . We’ll find those deals by being better at valuation and better at adding value to our deals.