Finding Opportunity

December 8, 2008

The real estate market continues to struggle, but more than a few buyers made opportunistic plays in the past month. Perhaps most notable was the activity that seems to straddle the real estate and infrastructure markets, which considering the leanings of President-elect Barack Obama, would seem to be an interesting play.

Morgan Stanley, for instance, finalized a $1.16 billion deal to take over a 75-year lease of Chicago’s parking meter system. It underscores a need by local governments to come up with capital and at the same time reflects a desire by investors to fill that need. Separately, Starwood affiliate Harmony Development signed an MOU with Florida State University to build an energy and sustainability center, a deal that is as much a bet on new energy as it is on the real estate markets.

Another key theme in recent months, no surprise, has been distress and the opportunities that have arisen in light of the credit market’s woes. In the past few months, for instance, LandAmerica and Vineyards Property each filed for bankruptcy protection. Moreover, weakness elsewhere, should create opportunities for real estate investors. The New York Times Co., for instance, could be in the market for a sale/leaseback of its new headquarters.