The 2009 Toronto Real Estate Forum
Once again I attended the real estate forum in Toronto and once again I was not surprised by the content or cleverness of the speakers. It was plainly evident that there is no consensus about the near term future of real estate, interest rates, cap rates or other critical factors affecting our industry. But there was no shortage of opinion from those whose opinions appear to matter most.
Managing a real estate company through choppy economic times requires us to broaden our sensitivity analysis and consider shocks as routine. In fact, many players have cashed up in the hopes that more shocks to the system will occur that will allow them to pick up bargains and deploy funds. If these shocks take a long time to occur you have to wonder what an asset manager will do with committed cash and no revenue being generated. They will probably relent at some point and have to invest in something or risk losing their investors. This might lead to short term strength in the market.
The distressed debt seminar in particular was indicative of this theme of uncertainty. When the conference was set up, the organizers obviously thought that this would be a timely and relevant topic of discussion. As it turns out, very little time was spent on distressed debt as very few transactions had occurred at the date of the forum. Obviously, many more transitions and opportunities were anticipated and I was certainly in the camp that thought there would be many more distressed properties by now.
The only predictable part of the conference was how effective the conversations are outside the conference doors. That is where you find out where the average real estate person is focused and the direction they are taking their companies. Many are nervous and remain very cautious in their outlook. That is when I knew I was not alone.
