Planning For The Rescue Capital Wave

As the new year progresses, it is clear that inflation, interest rates, decreased valuations and geopolitical unrest, together with the uncertain future of major asset classes (particularly office and retail), will lead to a wave of distressed real estate transactions. This may result in a familiar pattern of workouts, bankruptcies and foreclosures relating to existing indebtedness.

However, there is a less familiar trend emerging, one that harkens back to the stagflation era of the early 1980s: rescue capital transactions.

Many real estate ventures with positive cash flows will find it necessary to recapitalize due to the current market environment, where refinancing is unavailable, debt maturity may be approaching and current valuations make dispositions unattractive and impracticable. At the same time, private equity firms and other alternative sources of capital, including family offices, have an unprecedented amount of "dry powder" in their reserves and an