As office markets continue to lose value, more "tenant-in-common" investments are failing, leaving small investors in the lurch. "With the majority of TIC investments being syndicated from 2005 to 2007, the future of many of these assets is extremely bleak," says Marc Perusse, principal at RSS Advisors, a Denver firm that works with troubled TIC investors.
After raising huge amounts of capital last year by selling stock, REITs are well positioned to swoop in on bargain properties. That hasn't happened, though -- mainly because good deals still are hard to find. "Today I'm sitting with $125 million in cash that I can't find investment for," says Stephen Richter, chief financial officer of Weingarten Realty Investors.
ING Clarion director and portfolio manager Chris Reich predicts a total return from global REITs of 5% to 15% this year. "We believe acquisition opportunities for sensibly geared companies will emerge in 2010," he says.
Investors are targeting Prague's commercial real estate market, which stands out among other Central and Eastern European cities. According to CB Richard Ellis, Prague's office vacancy rate was below those of Sofia, Bulgaria; Bucharest, Romania; or Budapest, Hungary. Holger Schmidtmayr, Sparkassen's member of the board responsible for Central and Eastern Europe, believes Prague will be the first market in the region to recover from the downturn.