Answer extracted from the The Single Source podcast — listen to the full episode below.
What created the 50% discount in commercial real estate in 2024?
Extended periods of high interest rates, coupled with low transaction volumes in commercial real estate and slowing capital flows from macroeconomic disruptions, have created what amounts to a 50% off sale across America's commercial real estate market. This convergence of conditions has opened exceptional windows for buyers with capital and certainty of close.
The current market represents a sharp departure from the historical norm. Cap rates on quality assets have compressed to unprecedented levels in some sectors, yet distressed sellers face mounting debt service pressures and loan maturity walls. This mismatch between buyer appetite and seller urgency is where opportunities crystallize.
Multifamily assets present a particular case study. Although rate stagnation has slowed the multifamily market, excess capital is artificially compressing cap rates in that segment, making it less attractive than other property types for opportunistic investors hunting for true yield advantages.
Hotels and distressed debt: Where certainty commands a premium
The hospitality sector illustrates exactly how market conditions translate into concrete opportunities. As Raheem Charania details in the episode, Woodvale acquired a portfolio of Marriott-branded hotels—364 keys total—at a 12.25% cap rate on last year's EBITDA. For context, hotels typically trade in the six to eight cap rate range; this represented 50% to 100% better pricing than standard market acquisitions.
The secret to that valuation gap: Woodvale provided certainty. Instead of relying on traditional financing contingencies, they closed within 30 days with all-cash terms. For sellers drowning in underwater debt or facing loan maturity deadlines, that speed and certainty proved worth far more than waiting for idealized pricing from slower, contingent buyers.
"You make your money when you buy it. So if you buy it low enough, you can be fine."
Raheem Charania — Founder and Managing Partner of Woodvale. With decades of commercial real estate experience, Charania built Woodvale as an opportunistic fund backed by his own family office, making the firm and himself the largest LP in every deal—a structural advantage that enables them to move faster and absorb more risk than traditional competitors.
The hotel acquisition also demonstrates how macro timing reshapes individual deal economics. Interest rate regimes directly influence which asset classes face the most pressure. Hotels, heavily leveraged during the low-rate era, are now among the first to face refinancing crises. Buyers who understand that cascade can position themselves months before the wave of forced sales peaks.
Understanding why Woodvale targets distressed assets across multiple property types requires acknowledging a fundamental rule: the firm remains asset class agnostic. Their focus is not on betting which property type will recover fastest, but on finding which assets are most mispriced relative to their intrinsic cash generation potential.
Key takeaways
- High interest rates and low transaction volumes have created a structural discount of 50% or more across commercial real estate in the United States.
- Slowing capital flows from macroeconomic events have intensified pricing pressure on distressed sellers facing loan maturity walls and underwater debt positions.
- Hospitality assets like Marriott-branded hotels are trading at 12.25% cap rates—double the historical six to eight cap rate range—for buyers offering certainty and speed.
- Multifamily, despite rate stagnation, remains less attractive for yield-focused investors because excess capital influx is artificially compressing cap rates in that sector.
See also
What property types and strategies does an opportunistic commercial real estate private equity fund target in today's market?
Woodvale is asset class agnostic and focuses on identifying properties that deliver the highest yields for investors. The firm pursues deals where they are the largest LP, backed by their own family office.
Why does cannabis private credit offer portfolio diversification benefits for income allocators?
Cannabis yields are completely uncorrelated from the rest of the private credit market and from interest rates, offering high returns independent of broader macroeconomic movements.
What differentiates an owner-operator cannabis credit manager in terms of underwriting expertise?
Direct operational experience in cannabis—such as building a business from the application phase to significant EBITDA—provides crucial expertise across cultivation, compliance, and financial management.