In reference to performing a mode of action you are given three strategy options:
- Asset Trades or Asset Arbitrage is what is disclosed in the industry among professionals.
- Capital Placement
- Capital Formation
The most skilled professionals pride themselves on Capital Placement and Formation. You may of noticed that throughout the last few years lending has tightened increased the amount of equity that is needed for a traditional institution to fund a deal.
Although this is common in a lower market this gives others the ability to leverage this intellectual capital. The rave in 2010 became syndication. During 2009-2010 Warren Buffet paid frequent trips to Washington DC to have series of questions in reference to this very thing. By 2015 the process of Syndication has become less regulated allowing a slew of investors and speculators to aimlessly exchange or trade their hard earned money for potential earnings via equity.
What most are uneducated about is that equity is not all that it cracks up to be. Equity is the opportunity to obtain the highest gain, while not truly securing your investment.
Asset Arbitrage is typically performed is something is being traded at a low basis point for its existing market. This creates a win-win situation for both the operator and seller. 2017 is expected to have higher amounts for exit strategy meaning that value will be stiffed at lower returns due to others exiting on the height of the bell curve.
Capital Placement is the process of placing the proper debt on a property that will perform well especially if stabilized. With rates expecting to increase it is important to place capital on the proper groups of assets.
Capital Formation is also know as the debt stack this can often refer to having the capital organized in a way where either the institution, lenders, investors, equity partners and sponsor has priority or is protected.