As we wrap up another year, questions are plentiful as to where we are in the real estate cycle. Traditionally, herd mentality seemed to rule and most market opinions remained consistent. Today, however, we hear perspectives across the board. Outside of the uncertainty relative to international capital flows, one potential driver of such discrepancy…..fund life cycles. Funds in the later stages of deployment have had a strong run of performance, thereby creating hesitancy to spoil existing returns and future capital raising efforts. Conversely, funds who have recently raised follow-on vehicles, continually larger in size, have fresh mandates to invest and with return thresholds that have been tempered to meet the current investment environment. If the debt markets can keep their discipline in check, the reluctance of equity may ease as newly raised funds come to market.
By David Kidder, President and Managing Director