E quities investors are very used to researching a potential purchase, deciding that it represents a 'buy', making a substantial investment ... and then seeing it drop precipitously against all reasonable expectations. Sometimes, the cause is obvious: new news that fundamentally alters the value of the holding. Other times, however, the reason is not obvious, and the investor has to consider three choices: hold, sell, or add more shares to the holding. Without an understanding as to why the price has fallen, the decision is difficult. The market should not know something about the stock that the investor does not know, so has the investor merely got the pricing wrong or missed some salient issue? In that case, the decision is hold (the market has reflected the issue in its pricing, so it has corrected to 'fair value'). Alternatively, the investor may believe that the market has misunderstood the stock and the fall represents a buying opportunity: doubling up on the investment would bring down the average buying price and increase exposure to the stock. Very often, however, a price fall is followed by a further price fall. Having bought more, the investor's dilemma increases: has he been stupid or is this an even better buying opportunity. The risk seems to increase, but so does the potential return. This is a situation that equities investors have to deal with very regularly, but it is one that real estate investors rarely have to deal with in such stark terms. When real estate prices fall, the reason is very obvious. It may be changes in economic conditions or property-specific factors. When the market as a whole falls, there is generally a large amount of cyclicality about it. Investors can be reasonably confident about the risks and potential returns of their investments or potential investments. That is why the real estate investment industry has found it so difficult to price the retail sector. Prices fall, and it begins to not just reflect the problems of the sector but to also offer an increased upside. Then they fall again. It starts to look like a 'bargain'. Then it falls again. The problem is that the 'stickiness' in prices in an inherently illiquid (and not very transparent) asset class like property means that prices take some time to fully reflect the changed market conditions. Most significantly, real estate investors almost always price against comparable transactions. The concept of 'fundamental value' and, in particular, pricing against other asset classes is quite alien to the industry. Even attempts at using discounted cash flow approaches are really only dissecting current pricing, accepting it as being efficient, and relying on the adjusted comparable evidence for the expected end value. The sale of the West Orchards Shopping Centre, Coventry, on 3rd February 2021, for GBP4.1m was the latest example of how cheap retail sector assets can become. The auction guide price was GBP4.85m, so at least the vendors were not being totally unrealistic. The auction particulars indicated a yield of 46.1%. According to Costar, the shopping centre was valued at GBP37m in 2013 and the seller was RDI REIT (it was, apparently, only one of two retail assets still owned by the company). Allsops, the auctioneers, state that the shopping centre comprises 220,000 sq ft of retail food and leisure over six floors, part let to Marks and Spencer. The freehold is held by Coventry City Council. Although there have been a number of previous sales of shopping centres at heavily 'discounted' prices, this is - I believe - the first of what would previously have been regarded as a fairly prime city-centre shopping centre. It provides further evidence, if any was necessary, of the state of distress in the sector.