Updated with correction
It's the worst of times for real estate money managers.
Properties with purchase offers are not closing; transactions are down; and managers are going hat in hand to their investors for cash to prop up properties they do own.
“There's no light, no tunnel, no liquidity, no equity,” said Jeff Barclay, managing director and head of acquisitions and development at real estate investment firm ING Clarion Partners, New York.
“Some people are being wiped out,” said Claudia Faust, co-founder and managing partner at Hawkeye Partners LP, a real estate private equity firm in Austin, Texas. Hawkeye takes stakes in real estate money managers.
Deals are being broken at historically high rates.
Some buyers are reneging on deals struck just a month or two ago. Others have walked out on deals or “shamelessly” renegotiated deals after they have been struck, Mr. Barclay said.
For example, in October Tishman Speyer Properties reportedly backed out of a deal to buy the Mobil Building in midtown New York for $400 million. This was after the collapse of the New York-based firm's $1 billion deal to redevelop the New York Metropolitan Transportation Authority's 26-acre Hudson Rail Yards into a new commercial district and residential neighborhood.
In September alone, deals worth $20 billion were scheduled to close, but only about half actually were completed, said Neal Elkin, president of Real Estate Analytics LLC, the New York-based real estate global markets group of State Street Global Markets. The firm and Moody's Investors Service, New York, sponsor a series of real estate transaction-based indexes based on data from Real Capital Analytics Inc., a real estate research firm in New York.