It’s the Deals You Don’t Do…
…that make the difference in the long run. Was reminded of this axiom this weekend when I looked back at MIT/CRE CREDL’s Transactions-Based Index. I was part of a team tracking and trying to close a Silicon Valley 400-unit apartment asset that was a solid C asset in an A- location—a classic value add play. Our bid came up 16% short of the sale price [about a 6 cap on YE2008 NOI]. At the time I was really disappointed that we couldn’t close on this asset.
Now, with the benefit of hindsight, our pricing model was 10% HIGH—prices dropped another 10% last year, and will probably bottom out at the end of this year, as job growth returns to backstop occupancy in the Valley.
Thanks, Tom and Myles. That lunch conversation over sphaghetti and meatballs saved my butt—nothing worse than being wrapped around the axle on a real estate project where you will never get out ahead of the preferred return.
We lives to die another day…
