By Frances Kiradjian
Today’s climate may well present a new opportunity for those sitting with cash, or some form of available cash.
Cash is king, always has been, always will be. We were always taught to have a rainy-day savings account just for insurance of upcoming needs or even opportunities. If you had a crystal ball or were born a true visionary, you could have imagined/envisioned how events might unfold from the first day that COVID-19 was announced.
And as it started growing globally, you would’ve had enough time to figure how to make your “cash” available at the ready-set-go. This would most certainly give you a leg up on being ready when those opportunities presented themselves, or when the private whisper network included you in those alerts.
But let’s face it, Boardrooms in major corporations are making their lists now – and checking them twice. The Real Deal announced that the coronavirus is the deal of the century for many flush with money. “Hotels, retail properties and mortgage-backed securities in particular, present ripe targets for distressed-asset investors, the Wall Street Journal reported. As of December, private real-estate funds focusing on opportunistic and distressed-asset investments held $142 billion in dry powder, according to Preqin.”
In the hospitality industry, Blackstone and Starwood Capital Group are sitting on a treasure trove of funds, what they call “dry powder.” Besides the risk that might be involved, since no one really knows when travel will return, there is also the risk of looking like a shark in these infested waters – no pun intended. Conversations will need to be sensitive and heart-felt along with a little patience and understanding. All the human emotions will be involved in any negotiations.
On the positive side, a successful transaction under these circumstances could also be viewed as a gift from heaven. Being released from the enormous financial burden, even if at a price never imagined, could end up being a new opportunity, whether that’s the freedom to start anew when the time comes or turn in a completely different direction. Sometimes we need to look the gift-horse in the eye and accept it, even if it’s against the grain.