Investing in distressed assets is nothing new. We have seen it for decades and we have seen many examples in the 2008-2010 period due to the economic crisis.
This NYT article on the sale of the John Hancock Towers in Boston was of particular interest to me as I spend many of my consulting days working out of it when visiting our corporate office. Reading the recent history of the building I was reminded about the opportunity and risks involved in investing in distressed assets.
Investing in distressed assets can be very profitable. Often the reason for distress is very clear, personal/specific and temporary. When the distressed situation blows away, the distressed assets gains tremendous value! This article on investing in distressed assets highlights the profitability of the method when successful.
However, investing in distressed assets also has a high degree of risk. This risk is usually due to misreading the reason for distress or for misplaced or incorrect future expectations. The article also highlights an example of William Ackman’s (Perishing Square Capital Management) experience in investing in Stuyvesant Town and Peter Cooper Village.
If you are interested in learning more about investing in distressed assets, please do call or email us. Our finance tutors will be happy to assist you in learning how to evaluate and model opportunities.
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