Opportunistic Real Estate Investing

As capital markets adjust to a higher interest rate environment, investors who are patient, flexible, and well-capitalized are finding opportunities where others see disruption. Opportunistic real estate strategies are focused on acquiring high-quality assets at discounts driven by market dislocation, liquidity constraints, and capital structure stress.

For value-oriented allocators, this segment of the market is offering one of the most compelling deployment windows in recent years.

At IEQ Capital, we view opportunistic real estate as a potentially strategic equity replacement. These strategies are designed to unlock value by targeting dislocated pricing, executing capital structure solutions, and implementing focused property enhancements.

What’s Driving the Opportunity

Capital Structure Pressure Expands the Investment Set

Over the past two years, rising rates and tighter credit have severely limited refinancing options for real estate owners. Many properties underwritten in the low-rate era are now confronting cash flow constraints, capital shortfalls, or refinancing gaps, particularly those with near-term debt maturities.

With over $3.2 trillion in U.S. commercial real estate debt maturing by 2029,¹ a growing number of owners are unable to fully refinance their senior debt. This has led to increased demand for subordinate capital solutions and forced asset sales at discounted valuations. ²

Institutional Selling Creates Pricing Dislocation

Institutional portfolios under liquidity stress, particularly those facing redemption requests or rebalancing needs, have triggered sales of even high-quality, core assets. This wave of selling is driven not by asset deterioration, but by portfolio-level capital constraints.

This dynamic can offer well-capitalized buyers the opportunity to acquire institutional-quality properties at a discount to intrinsic value.

Market Volatility Rewards Prepared Buyers

Today’s market favors experienced managers who can move quickly and underwrite complex, transitional situations. Investors prepared to deploy capital into recapitalizations, note purchases, or repositioning opportunities are being compensated for their agility and sophistication.

“Clients are increasingly focused on private market solutions that offer downside protection and real asset exposure. Opportunistic real estate can present a timely way to meet those goals with managers equipped to navigate dislocation.” - Frank McFarland, Founding Partner at IEQ Capital

Characteristics of IEQ’s Opportunistic Real Estate Strategy

Target Situations

• Properties with near-term debt maturity and limited refinancing options.
• Institutional-quality assets with operational inefficiencies or undercapitalized ownership.
• Liquidity-driven sellers facing redemption pressures or portfolio constraints.

Execution Playbook

• Acquire at discounts on replacement cost or peak historical valuations.
• Implement targeted capex and operational improvements.
• Refinance or exit opportunistically as market conditions evolve.

Target Outcome Goals

• Capture price appreciation through hands-on asset management.
• Generate current income as properties stabilize.
• Deliver strong risk-adjusted returns through distressed or dislocated entry points.

Why Now

Favorable Capital Supply-Demand Dynamics

Real estate fundraising slowed markedly in 2024, leading to significant under deployment of capital. With fewer active buyers and an increase in undercapitalized sellers, negotiating power has shifted to investors ready to transact. Elevated rates and reduced new development further support healthier supply-demand fundamentals.³

Attractive Entry Pricing with Embedded Upside

Capital constraints continue to pressure property valuations across sectors, even for high-quality assets. As a result, investors can access premium properties at appealing basis levels, which can create inherent downside protection and the potential for asymmetric returns.⁴

“The current market offers a rare convergence of capital scarcity, forced selling, and already-lowered valuations. For investors with a value discipline and interest in long-term inflation hedging, this cycle can provide a compelling entry point into real assets.” - Mike McIntosh, Chief Market Strategist at IEQ Capital.

Risks to Consider

Opportunistic strategies carry inherent risks that require careful evaluation and experienced oversight:

• Execution Risk: Particularly around development, leasing, or repositioning.
• Liquidity Risk: Holding periods may extend in volatile markets.
• Market Risk: Exposure to cap rate shifts, demand changes, and macro shocks.
• Complexity Risk: Associated with managing and structuring non-traditional deals.

Partnering with cycle-tested managers who have a track record of value creation is critical to managing these exposures.

The IEQ Capital Perspective

At IEQ Capital, we believe the current environment represents a unique inflection point for opportunistic real estate strategies. The convergence of elevated rates, constrained liquidity, and transitional ownership structures has created a cycle of dislocation, and with it, the potential to acquire premium assets at compelling discounts.

Our investment approach emphasizes disciplined underwriting, manager experience, and active operational involvement. Opportunistic real estate can serve as a dynamic portfolio component for investors seeking equity-like returns, enhanced yield, and exposure to long-term real asset growth.

We invite you to speak with our investment team to explore how opportunistic real estate strategies can complement your portfolio, capitalize on market dislocation, and drive long-term value.

1. CenterSquare, March 2025
2. Trepp, January 2025
3. KKR, February 2025
4. Reuters, April 2025

Opportunistic Real Estate

• Operating Risk. Opportunistic real estate assets are more operationally intensive and require more hands-on value-add and operating expertise to drive value from the investments.
• Macro Risk. Economic weakness could potentially increase cap rates, lower occupancy, and lower rents, all of which would adversely impact real estate prices and a fund’s performance. 
• Execution Risk. Opportunistic real estate involves significant execution of risk specific to improving operations, refinancing, and value-add to drive returns. 
• Liquidity Risk: Exit strategies are typically contingent on capital markets and prevailing appetite for risk, which may ebb and flow with the cycle.

This document is for informational purposes only and is intended exclusively for the use of the persons to whom it is delivered and the information provided therein is confidential and may not be reproduced in its entirety or in part, or redistributed to any party in any form, without the prior written consent of IEQ Capital, LLC (“IEQ” or “IEQ Capital”). Information contained in this document is current only as of the date specified in the document, regardless of the time of delivery or of any investment, and IEQ does not undertake any duty to update the information set forth herein. The information contained in this document does not constitute an offer to sell or the solicitation of an offer to purchase or sell any securities, including any securities or alternative investments recommended by IEQ. Regarding alternative investments, any such offer or solicitation may be made only by means of the delivery of a confidential private offering memorandum which will contain material information not included herein regarding, among other things, information with respect to risks and potential conflicts of interest. No representation is made that any client will or is likely to achieve its objectives, that IEQ Capital’s strategies, investment process or risk management will be successful, or that any client will or is likely to achieve results comparable to any shown or will make any profit or will not suffer losses or loss of principal. Investing involves risks. You should not construe the contents of this document as legal, tax, investment or other advice. Any tax-related decisions should be made after conducting such investigations as the investor deems necessary and consulting the investor’s own legal, accounting and tax advisers to make an independent determination of the suitability and consequences of a composite election.