Opportunistic Capital Prepares for Distressed Investment Spree

Investors across the board are interested in co-investment opportunities in distressed assets and loans.

Even as COVID-19 continues to wreak havoc with the global economy—putting the majority of commercial real estate investment activity on pause—entities are lining up gobs of capital to pounce on distressed real estate opportunities expected to arise in the coming months.

“Billions of dollars are being plowed into new real estate funds created to buy distressed debt backed by hotels, malls, office buildings and other commercial properties suffering significant losses of value during the coronavirus crisis,” says Michael D. Underhill, chief investment officer at Capital Innovations. The global real assets investment management firm is receiving inquiries from investors across the board who are interested in co-investment opportunities in distressed assets, including institutional investors, sovereign wealth funds and family offices. “We are seeing significant pent up demand for credit investors to invest in liquid securities and hard assets, including loans and real estate, as many have been biding their time for the last several years,” says Underhill.

Private equity firms such as Blackstone, KKR and Terra Capital Partners are among those firms that have closed on or are currently raising capital for distressed funds. Apollo Global Management Inc. plans to raise up to $20 billion for distressed opportunities.

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