David Saxe - Managing Principal, Calvera Partners
How to navigate risk, minimize your downside, and maximize returns investing in distressed real estate
In this first guest episode of Series 5 of the GowerCrowd.com podcast, The Real Estate Reality Show, you're going to be meeting with David Saxe. David has lived through prior real estate downturns at major institutional commercial real estate companies.
He discusses how distress is filtering its way into the CRE investing world and we look at the impact of rising interest rates on cap rates, asset values, and how this is leading to an increased flow of distressed opportunities across all asset classes.
David shares his insights into how sophisticated sponsors mitigate risk in their underwriting and in their operations, and he also discusses how less experienced players get complacent during good times in a way that can lead to critical failures when times turn bad.
Here are some highlights from our conversation:
- Multifamily cap-rates are not telling the whole story because deals with assumable debt are being sold at inflated values artificially propping up values and, hence, comparable cap rates.
- It doesn't matter how someone spins it, when interest rates go up, cap rates go up, values come down. Period.
- True real estate professionals underwrite to best, worst, and most realistic scenarios and for those that don’t or didn’t, it’s too late now.
- Bridge lenders (pref. equity, mezz debt etc) have no qualms taking over assets and in some cases provide their ‘rescue capital’ with that exact intention.
And lots more in this episode with David and a great way to spend your commute, listening in.
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