From G&M 24 May 2011 -
“The world’s largest private equity firm is taking its money out of Canadian real estate to take advantage of surging demand for buildings, flooding the market with $900-million of office buildings.
Blackstone Group LP has conscripted CIBC World Markets to sell its 29 Canadian buildings just as life returns to the Canadian investment market, with cash-rich real estate investment funds looking to invest billions of dollars to expand their portfolios.”
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“The danger of flooding the market like this is they are potentially depressing their own sale prices,” said John Andrew, a real estate professor at Queen’s University. “I hope they don’t see this as some sort of market peak. What is more likely is they want to take that money and invest it in other markets where there are more opportunities to buy at distressed prices.”
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Smart money? Toppy? – vreaa
LOL!! “I hope they don’t see this as some sort of market peak.” Yeah lots of people hope this– doesn’t make it true!
Why else would you liquidate 100% of your holdings in a specific asset class?
There are some juicy commercial RE deals in the US right now. They may be liquidating 100% because overhead associated with a smaller portfolio in Canadian jurisdiction would be too high.
Hi Rusty.
As John Andrew says, they may not be calling a top so much as seeing other deals with far better risk/reward setups.
But, that would also imply that other smart investors could begin to act on the same math, and that is the stuff that tops are made of.
What about this one: “While there are a lot of reasons to think property values could go down, it’s hard to imagine many reasons why they should continue to go up.”
To play devils advocate, it could also be that they’re potentially in crisis
May 26 –
“Private-equity firms Blackstone Group, Carlyle Group, Permira and TPG Capital in 2006 took semiconductor company Freescale private in a deal valued at $17.6 billion. Today, the quartet is staring at a $3 billion loss on their investment.”
http://blogs.wsj.com/deals/2011/05/26/freescales-ipo-and-the-3-billion-hole/?mod=google_news_blog
A pertinent observation, thanks.
i am totally ok with Poppy Bush and James Baker losing money.
When we sold our apartment building, the guy in the five thousand dollar suit, looking rather puffed up, said ” well there we go, then” – he was an insufferable jerk, so I casually said – ” enjoy the City, we call it Bangkok, by the Bay, except Thailand has Thai neigbors. Enjoy.”