'There's definitely going to be blood in the streets': A Tampa Bay real estate investor readies for post-coronavirus deals
By Ashley Gurbal Kritzer
Tampa Bay Business Journal
Published: Apr 16, 2020

Punit Shah has been waiting for a downturn.

The CEO of Liberty Group in Tampa says that in the past 36 months, he's sold off 25 hotels; 14 remain in his portfolio. In that same time period, he's purchased only one hotel — waiting, patiently, for the right time to buy. And now, with the coronavirus pandemic squeezing commercial property owners, that time is almost here.

"We’ve really been focused on preserving liquidity and monetizing our investments," Shah said, "and certainly, I did not anticipate a downturn like this, because this has elements of a financial crisis and a health issue. But I did expect to see some opportunities."

The pandemic has brought the global economy to a halt, closing everything from office towers to hotels to restaurants and retailers. If those businesses can't pay their rent, their landlords can't pay their mortgage — and there is no shortage of investors with cash sitting on the sidelines, waiting to swoop in and make a deal. Household names like Brookfield Asset Management and Starwood Capital Group have set aside billions, Wall Street Journal reports, and are anticipating a big buying opportunity.

Liberty Group specializes in hotels, most of which saw their revenue drop off practically overnight.

"I think a correction was due," Shah said. "The amount of capital out there was so plentiful and cheap that people were making very ambitious investments, and the market fundamentals didn’t support the development of new hotels in many cases."

One of the first hotels Shah sold off this cycle, the Aloft Tampa Downtown, began as a deal he and his partners at Convergent Capital Partners bought out of foreclosure. The hotel was previously an office tower for Mercantile Bank, and Liberty and Convergent snapped it up for $2.2 million in 2012.

The buying opportunity, Shah said, is likely four to six months away. Between federal aid like the Paycheck Protection Program and deferred mortgage payments, he thinks there's enough aid to carry most businesses — and their landlords — through the next several months.

"I feel bad — everyone is going to feel the pain," he said. "Whether it’s retail, industrial, office, hospitality, there’s definitely going to be blood in the streets, and it’s a matter of who’s going to be able to identify the opportunity."

Unlike the deals that unfolded in the aftermath of the Great Recession in 2008, Shah doesn't expect bargain-basement prices — but he does expect far more players, all with cash in hand, to be chasing the same deals.

"I don’t think it’s going to be the buying opportunity where you buy it and flip it for a killing," Shah said. "It may be a discount to peak, but the people who are going to excel are those who are specialists in their industries."