My last vacation was a short one, albeit one of the best I’ve ever had—five days of camping, hiking, and rock climbing with some friends in Arches National Park near Moab, Utah. We enjoyed brilliant sunsets over fiery red rock formations; climbed to gorgeous plateaus with 360 degree views of some of the most stunning landscapes I’ve ever seen; and ended every evening eating, talking, and laughing over an open fire. It was perfect. Of course, my crew, in its infinite wisdom, had remembered to pack trail mix and gummi bears but had neglected to bring matches and pillows. (Hey, at least our priorities are in order.) So we made do with what we had, borrowing a handful of matches from a neighboring camper and rolling clothes in our pullovers to rest our heads on.

I’ve realized that improvisation is a necessary ingredient in any travel itinerary. A few years back, when an ex and I were in Mexico, we got stuck in a fierce tropical storm while visiting the Mayan ruins of Chichen Itza near Cancún. Our rental car sat immersed in 4 feet of water. We had no idea how we were going to get back to our coastal hotel in time for our flight back home the next morning. Which is when we saw a bus of European tourists, most of whom spoke German, and decided to hitch a ride. I have no idea how we talked ourselves into getting seats on that bus (suffice it to say, neither of us speak a lick of German), but we did. Improvisation. It works.

I’ve heard on more than one occasion that improvisation is also a necessary ingredient in real estate. I remember a conversation I had with the CEO of a growing third-party management firm in early 2009 about his firm’s numerous value-add funds. “Have you been able to deploy much this year?” I asked. “Oh, they’re no longer value-add funds,” he said. “We’ve redeployed them as distress acquisition funds, and we anticipate deploying most of it by the end of the year.”

He wasn’t alone. Most of the major apartment REITs—from Camden Property Trust to Equity Residential—amassed giant war chests in hopes of taking advantage of the flood of distressed assets that economists and real estate watchers predicted would begin saturating the marketplace.

The problem was that this expected flood never really manifested itself. In fact, it was more like a trickle, if anything.

Sure, a few firms capitalized on local foreclosures or got in early as fee managers with some of the special servicers handling troubled CMBS loans (the aforementioned CEO being one of them). Those folks were able to turn a tidy profit. But the majority of funds were not deployed, as apartment owners continue to wait for opportunities that don’t seem to want to come.

Part of the problem is that many banks continue to “extend-and-pretend” in hopes of avoiding adding losses to their books. That’s what seems to be happening with the loans coming due this year—a whopping 40 percent of the existing $32.3 billion in CMBS loans—according to J.P. Morgan. And most researchers predict that the worst loans (written in 2006 and 2007) will have loss rates as high as 14 percent when they come due in 2011 and 2012.

In other words, the distress is there. But nothing’s happening with it. And in the apartment industry, the blame for this logjam is being laid on the special servicers and banks. In a tangled web of finger pointing, multifamily owners accuse servicers of having ulterior motives (namely the desire to secure fee-management business from troubled assets) and intentionally keeping loans and assets off the marketplace. (We delve into this tug of war in this month’s compelling look at the special servicing environment, “Jammed Up” by Les Shaver)

What this means for apartment owners, however, is that if nothing gives, they may have to once again play a game of improv with their funds, operations, and business strategies. Where that improvisation takes them, however, is anybody’s guess.