commerical RE equity cap raise

Can a business with commercial real estate producing cash flows raise equity capital based off an asset valuation (much higher than the valuation based off cash flows)? Say the properties are entirely paid off and there is no debt on the bs.

Would a PE group ever get into an investment like this? (if they can get the business to agree not to take on any debt for a certain amount of time)?

Comments (2)

 
May 17, 2012 - 12:11pm

investors are either going to loan money or buy equity, but in either case they are going to make their make their own decision based on what they think the true fair value is and what their return will be over an X year period. Saying that the value is much higher than cash flow sounds dubious because cash flow drives the value.

You'd have to find a fund that specializes in real estate, I suppose there are some out there.

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