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From the July issue:Double-dip fears notwithstanding, the real estate industry is seeing a resurgence of private equity investment. But this time around, firms who got burned during the financial crisis are taking a different tack.

Instead of doing deals on a one-off basis, with a different developer on each deal, a growing number of private equity funds are forming exclusive agreements with experienced developers through new, independent real estate operating companies in New York City and elsewhere. In an environment where many see enormous potential for growth, these investments give private equity players a leg up on the competition, and a chance to share in higher profits (known as the “promote”) if the project succeeds.

Deals structured in this way are not new; in 2003, for example, the now-defunct developer Clarett Group and Prudential Real Estate Investors formed Clarett Capital LLC, a real estate development company.

But more and more private equity firms are now investing at the general-partner level. [more]

From left: Whitney Wilcox, Isaac Zion, Howard Nottingham, Jay Koster, Steven Koppel, at last night’s REBNY meeting

Lenders mulling which borrowers to chase into foreclosure will be considering not only the viability of the struggling real estate projects but also the relationship with the developers, finance experts said at a panel last night held at the Real Estate Board of New York. While most lenders do not want to take back distressed properties and are content to extend loan terms, in certain situations they will move against the owners. In those cases, aggressive efforts to take back properties will at times be made based on the level of business the borrower has with the lender, said panelist Steven Koppel, partner at law firm Jones Day. “A strong bank may have more of an appetite to force the issue, especially if the borrowing entity is not a client they want in the future or is in an asset class they are not really interested in,” Koppel said. Comments