I'm seeing deals fall through or sellers take off market because exits are no where near pro formas. I saw a KKR backed deal up for sale a year or two after acq; looked at their capex history and it was a huge spend, little rent growth achieved, sponsor was started by some brokers a few years ago, etc etc.
I've seen similar with big name LPs, although smaller than KKR. Is anyone else seeing valuations not pan out during sale a few years after their acq's, or groups getting burned due to purchasing at high basis?
These same deals I'm seeing, if you back their purchase price into a /unit or /sf basis, they are basically offering to exit at their 'par', so your achieved coc becomes your return... pricing always starts out at a price wayyy above replacement too, which may be justified to in place rents/cap rate, but still, the values are so off base from the cost of the hard asset....
Thoughts?
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