Market illiquidity created by lack of confidence, lack of clarity in pricing The current dislocation in the credit markets has created the opportunity to purchase residential real estate assets at very attractive risk-adjusted returns. Current seizure in the capital markets will have a direct effect on property valuations.
Values have deteriorated in residential real estate, presenting the Fund with ongoing opportunities in the market place — current market conditions are a result of lack of funding and forced liquidations. This is a credit market dislocation, not just a real estate dislocation. Real estate capital markets are more closely interconnected and are a larger percentage of the global capital markets than in past cycles.
Limited timeframe for excess supply to be absorbed
Lenders are restricted to lending to buyers with strong credit leaving a surplus of properties on the market
Lenders are unable to refinance many subprime loans coming due, leaving many homeowners overleveraged without the ability to refinance
Until liquidity returns, re-priced assets will be unattractive to conventional banks
Most markets will not see recovery until prices reset and the inventory of houses significantly decreases to more stable, pre-bubble levels.
We are in the midst of a significant cycle of defaults due to job loss, lower valuations and higher LTVs, as well as mortgage resets that have triggered. Using the current credit cycle as a proxy to determine the expected window of opportunity, we expect that there are approximately four to six years in the current lifecycle for the fund to capture the opportunities that exist.
PrimeVest Partners is uniquely positioned to capitalize on this market dislocation, with an excellent historical track record in post-credit crisis environments and an industry-leading operational infrastructure team
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