The $5.4 billion of New York’s Stuyvesant Town and Peter Cooper Village multifamily community to a venture of Tishman Speyer and BlackRock Inc. in late fall of 2006 eventually came to illustrate everything that was wrong with the previous boom era, including record-breaking pricing, faulty assumptions about future rent growth and deals that relied far too much on clever financial engineering and not enough on buyers’ having their own “skin in the game.” (That $5.4 billion price tag reportedly included a $3 billion CMBS loan, $1.3 billion in additional loans, approximately $1 billion raised from various equity investors and only $56 million from Jerry and Rob Speyer’s wallets).

And now Stuy Town is trading again—on October 20, a joint venture of Blackstone and Canadian real estate investment firm Ivanhoe Cambridge agreed to pay $5.3 billion to take the complex off the auction block, where Stuy Town ended up after Tishman Speyer walked away from it in 2010. Many industry experts insist this time will be different—after all, $5.3 billion now looks like a bargain and Blackstone ostensibly intends to hold the properties long-term. Plus, Blackstone has proven adept at making a fortune from other real estate owners’ misfortunes. But then again, the firm did take a net income loss of $416 million in the third quarter, for the first time since 2011.

In the mid-2000s, when everyone was mad about real estate, a heavily-promoted strategy called tenants-in-common (TIC) allowed pools of investors to own fractional interests in the same property or properties. The investors were often spread around the country, did not know each other and were not involved in the day-to-day management of the assets. In the aftermath of the real estate downturn and the financial crisis, it turned out many of TIC-owned properties were highly over-valued, refinancing was impossible to secure and unwinding the TIC structures, with their myriad of fractional owners, was a nightmare.

This cycle’s contribution to new investment mechanisms has been real estate crowdfunding, a strategy that allows multiple investors to place their money in real properties and real estate loans through online marketplaces. The investors don’t know each other, don’t manage the properties themselves and may not even know all that much about commercial real estate. The growing real estate crowdfunding industry is relatively young and investment strategies vary widely from firm to firm, so performance data in a downturn environment is scant or non-existent. Until now, however, real estate crowdfunding has been a viable option only for accredited investors—people with sufficient net worth and experience in investing to understand and cover for the risks inherent in this strategy. Changing SEC regulations, on the other hand, may allow a new crop of non-accredited investors to put their money into a sector that sometimes brings losses even for highly experienced professional operators (see examples above).

As everyone remembers, the last real estate boom ended with a bang—private equity firm’s the Blackstone Group’s announcement of its acquisition of Sam Zell’s Equity Office Properties Trust for a record-breaking $39 billion in November 2006. The deal capped an intense run-up in highly leveraged mergers and acquisitions in the commercial real estate sector many of which—most famously, General Growth Properties’ purchase of Rouse Co. for $12..6 billion in 2004 and Centro Properties Group’s acquisition of New Place Excel Realty Trust for $6.2 billion in 2007—didn’t end well.

Here’s a run-up of some of this year’s M&A activity: Lone Star Funds agreed to buy Home Properties Inc. for $7.6 billion, Prologis Inc. paid $5.9 billion for the real estate assets and operating platform of KTR Capital Partners, Ventas Inc. bought Ardent Medical Services for $1.75 billion, Simon Property Group made an unsuccessful attempt to take over rival Macerich Co. in a bid valued at $22.4 billion, Blackstone agreed to buy both BioMed Realty Trust for $4.8 billion and Strategic Hotels for $3.93 billion in the past two months alone, and Starwood Hotels is reportedly being courted by both Hyatt and “at least three” Chinese firms, according to published reports. 

Commercial real estate prices in 2006 and 2007 have been euphemistically described as “frothy.” When credit rating agency Moody’s and real estate research firm Real Capital Analytics released their latest Commercial Property Price Indices (CPPI) report in early October, the all-property composite index was up 1.5 percent in inflation-adjusted terms compared to November 2007, with prices for multifamily, industrial and urban office properties already higher than their pre-recession peaks. Caveat emptor.