Ethan Penner, founder and managing partner at Mosaic Real Estate Investors, discusses the rules of investing in a market dislocation and how those rules have changed, how long this market dislocation may last and how to find attractive returns in a dislocated market environment.
As though the COVID crisis didn’t already have real estate investors on edge, combined with the tragic events in Minneapolis and subsequent protests, every investment decision is now being especially carefully scrutinized and second guessed. How long will protests last? What change will come as a result? What impacts will these two issues…
Lenders may be excused from feeling particularly stressed right now. In typical times they have often had to make difficult decisions but now they must also factor in an uncertain economy that is being driven by the virus.
For Ethan Penner, CEO and co-founder of Mosaic Real Estate Investors, each investment cycle has its own tempo. That knowledge can provide comfort in times of great upheaval. “For those of us who have been through a couple of [distressed cycles], you could figure where they are going to fall out,” Penner says. “They’re all different. But they also have a certain kind of market psychology that tends to resemble similar ones, and you could imagine how they’re going to play out.”
The coronavirus pandemic “will likely result in an unprecedented period of economic instability and recession that could last as long as three years,” according to Ethan Penner, co-founder and managing partner of Mosaic Real Estate Investors. Penner started originating commercial mortgages for securitization following the savings and loan bailout in the late 1980s, so he’s been through at least three economic cycles.