Two-timing distressed funds

This much we know: There’s billions of dollars on the sidelines waiting to buy distressed real estate. But don’t be fooled: There’s also plenty of double-counting going on.

Adelaide Polsinelli, for example, has been fielding countless calls from distressed real estate fund managers and vulture investors lately, all looking for New York commercial real estate at rock-bottom prices.

But with sellers still unwilling to part with their properties at deep discounts, investors are getting restless.

Polsinelli, a broker and associate vice president of investments at Marcus & Millichap Investment Services, said: “Investors are jumping from fund to fund in the hopes that someone is actually doing deals.” She said they’re frequently committing the same money to each of those distressed funds. In turn, those funds are going out into the marketplace touting that cash.

“I wouldn’t be surprised if there were double-counting going on,” said Lawrence Lenzner, a partner at Patterson Belknap Webb & Tyler, who represents funds and property owners.

Michael Forrest, a former real estate attorney and broker who now owns and operates six apartment buildings on the Lower East Side, said he has had at least two investors come to him with proposed real estate investments — one with roughly $1 million to invest and one he described as a money aggregator with capital in excess of $100 million. He knows each of them is shopping that money around.

“If I went to them today and said, ‘I need you to put 10 percent down,’ they wouldn’t do it. And I wouldn’t want to take their money anyway because I don’t have any deals right now,” Forrest said. “A smart money guy is not going to put all his eggs in one basket with one real estate fund. He’s going to find 10 people to canvass for him.”

To some, that kind of networking by investors could create the illusion that there’s more “dry powder” out there than there actually is. “In reality, $40 million [could be] four different groups marketing the same $10 million source,” said Stephen Siminou, an attorney who practices real estate in Manhattan.

Siminou warned that duplicate commitments by investors could falsely inflate sellers’ expectations and stagnate the market. “Buildings might sit around waiting for that right offer, which may never come,” he explained.

Rob Kaliner, whose Ascend Group developed the Georgica on the Upper East Side, said, “People always seem to have a story to tell.

“But,” he said, “when it comes to actually putting down their money, there are few people who can actually stroke a check.”