Investors are raising funds to take advantage of busted condominium projects and other distressed property as a correction shows signs of spreading in parts of the commercial real-estate industry, the Wall Street Journal reported yesterday. Firms that are either raising money or are planning to start soliciting funds targeting commercial-property woes include Madison Realty Capital, Delshah Capital and a venture of investor Michael Ashner and New York developer Steven Witkoff. Most big private-equity firms, like Blackstone Group LP and KKR & Co., aren’t raising funds specifically for distressed situations. But they have money available to take advantage of condo developments falling short of sales projections, shopping centers struggling with competition from online retail, delinquent debt and other problems surfacing in several markets. To be sure, no one expects the kind of carnage that commercial property suffered during the last downturn, which cost investors billions. Many property types — like downtown office buildings and distribution centers — continue to enjoy rent growth and have access to ample financing at low interest rates.
