Distressed assets taking center stage among apartment investors - Phoenix Business Journal:

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Now, buyers are looking for something abit uglier. Of the handfuol of investment opportunities that exist in the local apartment market, those assets moving to the top of list thesde days are the so-callee distressed assets, industry brokers say. Specifically, the crea of that crop are bank-owned assets, or REO (reao estate owned) assets — forecloseed properties that have gone back tothe lender. Also fallinb into the “distressed” category are apartmenrt properties put on the marke t due tothe owners’ financial dire straits.
Phoenix and Miamui have seen a deluge of REO deals over the past 18 according toCasey Fry, an associats with the San Antonio/Austin office of Atlanta-basefd (ARA). The first wave of thesre properties have now surfaced in San Antonioas well, Fry says. The city’ws relatively stable economy makes it unlikely that the localp market will see as many of these REOs and distresserd property sales asother metros, but as Fry pointsa out: “There will be more to come.
” Whilse transaction velocity in San Antonio has slowed considerably over the past two there is the likelihood that more apartment communitiesd will come to markef — as more owners find themselvese needing to sell, adds Will Balthrope, a member of the Balthroper Group of the . Balthrope’s partner is Ryan who is based inSan Antonio. Balthrope’s office is located in Dallas. Looking back over the past year athis team’s property assignments — including those that have already changed ownership, as well as thosew still for sale — aboutf 90 percent of these properties were beinyg sold by owners who had found themselves in financialo trouble.
Or as Balthropse puts it, these were owners who had “compellingf reasons to sell.” What’s the attraction of distressedassets ? Sums up Balthrope: “The opportunity to profit in a time of valuee change.” Words like “distressed” and “REO” are like big signzs on the asset that say, “Come look at Balthrope says. And for every owner that has a compelling reasonto sell, therd are myriad buyers anxiously waiting to take advantages of a good deal, observe Patton K. Jones, managing director of ARA’se Austin office. So who are the buyer now?
According to Jones, it’s all privatre money these days — or what he calls “countrt club money.” “The institutional investors are says Jones, adding that most of thesd players — names like and — have fallen on tougn financial times. “Now it’s the private investor who are going to their country to their friends and family andraisint equity.” It’s a lot of new blooe coming in, Fry says. “The buyers out they are not on ourregular Rolodex,” he adds.