Capital Markets Update: What Equity Sources are Becoming More Active?
by Brian Klebash
FORT LEE, New Jersey – CapRate recently convened some of the leading capital markets experts in New Jersey’s Gold Coast to discuss whether and why various equity sources – including JV Equity, Foreign Investment, and Crowdfunding – are becoming more active on the Gold Coast. This piece is the first in a series of insider insights into New Jersey’s capital market arena.
“Our companies primarily focus on the institutional space, but we do have a lot of middle market business as well, so they have a lot of market knowledge within their township and within their municipality. So a lot of that equity is their own equity, but they do bring in some third party equity as well.”
- Justin Levitt, Principal at PGIM Real Estate Finance:
“Well, if the question is “is there a plethora of capital in the equity markets?” then I think everyone knows the answer is yes, but for the right deals. Obviously, we are in the late stages of this global hunger for yield, and we are seeing all of the capital invested in the family space, and international has been strong. In the Washington DC market, which has recovered, half the sales moved to international investors. So I think it’s a very good time in the capital markets from an equity perspective. In terms of opportunity funds, there’s been more raised. A lot of it’s to a very select group, but there is certainly a number of funds out there trying to fundraise. We’ve been successful at fundraising, which wasn’t as prevalent a few years ago when there was a real discernment among institutional investors to just go with the household names, and maybe not to the smaller firms, but that has changed. So the equity markets are robust and the debt markets are as well. Certain product types on the debt side are harder, but the debt fund business has grown and has really filled the void left by the holes in the great financial crisis.”
- John Randall, Senior Vice President, PCCP, LLC:
“To echo John’s thoughts on the equity side, we see a record amount of dry power in the market. There’s a lot of funds that have a lot of capital that’s out there, and what’s been frustrating for them is that some of these funds don’t see the right opportunities in different transactions. We’re at a very late stage in the cycle – some are saying 9th inning, the 12th inning, the 14th inning even – everyone is speculating this, and so it’s becoming very difficult to find a deal that you can underwrite the right returns and get comfortable to make sense for the cost of capital that the private equity funds have on their balance sheets.”
- Solomon Kinraich, Managing Principal, MLK Real Estate Capital