Many years ago, during a different turbulent cycle, a friend once advised me: “There are seasons of nature, go with them, not against them.” That friend practiced Zen Buddhism and although I didn't buy into everything he said, there was a lot to like in his teachings.
Today, his advice can be dusted off again as we come to realise that we are not in as much control of things as we once believed and where every day brings new adventures to the world of private equity real estate.
The past few months have made it seem that the harder we push to solve a crisis, the worse it gets. Allowing the solution to manifest itself and, in some ways, letting things play themselves out could be the healthier approach.
But personally, I've had enough of hearing and reading “it's like catching a falling knife.” We get it. We got it. And some of us caught it. We know what went wrong, although the ramifications are broader and deeper than most of us ever imagined.
As the legendary real estate opportunist – and more lately challenged newspaper owner – Sam Zell said at the ULI conference in Miami last week: “This is a time that tries mens' souls.” But this is also a time when we need to let nature run its course.
Private equity investors want answers and fingers continue to be pointed every which way. The fact of the matter is that it's not that important what we did – but what we do next.
Private equity has been about identifying and seizing opportunity. Nothing will change about that definition. What is changing is the availability of leverage and the whiplash impact of debt markets disintegrating just like Siegfried and Roy making a white tiger disappear in front of your eyes.
Okay, those guys did it with smoke and mirrors, but for those real estate investors who have been through cycles such as this one know, nothing is ever really over. The seasons have changed and summer has now turned to winter.
In the US, I would argue, real estate investors should become more collaborative about the real estate business going forward and use a different kind of leverage of knowledge: thinking, understanding and developing different solutions.
However we also shouldn’t underestimate the opinions and ideas of those in the industry who have not been around for 20 years. Those people that built the private equity real estate industry into what it is today, were also young once and – two decades ago – also hoping that someone would listen to them.
So as we navigate around the falling cutlery and remember my friend’s teachings, we will not only find more peace of mind but discover that we do, actually, know what to do.
The views expressed in this article are the author's own and are not representative of PEI Media.