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Workouts, Deep Pockets, and Fire Sales: An Analysis of Distressed Real Estate
Author(s) -
Crockett John H.
Publication year - 1990
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.00510
Subject(s) - real estate , incentive , asset (computer security) , cost approach , identification (biology) , business , finance , property management , economics , actuarial science , real estate investment trust , microeconomics , computer science , computer security , botany , biology
This paper presents a conceptual analysis of issues that relate to the management of distressed real estate assets. The paper examines the decision implications of the major characteristics of real estate assets and real estate markets in the light of information and incentive problems that emerge when assets fail to perform as anticipated. The paper focuses on the determination of commitments of additional resources to a troubled property, the identification of efficient holders of distressed assets, and the consideration of policies toward the disposition of distressed assets. The paper concludes that in many instances asset sales, rather than causing further destabilization as suggested by the fire sale image, are likely to contribute to reducing the costs associated with distress.