If the recent announcements coming from brokerage offices are a harbinger of things to come, we may soon see bankers and note holders begin to take over commercial real estate assets.
Brokers of all scale are restructuring to help lenders as well as government agencies disperse the distressed commercial property on their books. In one week last month, CB Richard Ellis (CBRE), a brokerage firm based in Los Angeles, announced the launch of a restructuring services group; Cushman and Wakefield, a brokerage firm based in New York, launched a resolution group; and Adache Real Estate, a sales and marketing firm based in Ft. Lauderdale, established a bulk sales division
The timing of these three announcements wasn't a coincidence. "Some of the banks are very aggressive with foreclosing projects right now," says Adam Adache, president of Adache Real Estate. "Regions Bank foreclosed on about four or five projects in South Florida recently."
Many of those note holders?specifically those who bought them from the originator?will want to quickly work through these assets, according to Keith Misner, executive managing director of CBRE's multifamily group.
"If it is a special servicer on behalf of a mortgage conduit or CMBS loan, they just have to follow a roadmap in the documents that created the bond," Misner says. "If any of these properties come back, they have to do certain steps in creation amounts of time. They have to hire a third-party person to sell it and value it. That's where we come in."
With traditional sales methods slowing and large volumes of distressed property expected to end with debt holders and possibly even the government, brokers consider the management of these assets a growth area. In the past, CBRE, which worked with note holders and even the Resolution Trust Corp. (a government-owned entity charged with liquidating assets in the early '90s), has fundamentally restructured its existing organization to work with banks.
"CBRE has been in the restructuring space for years in a variety of different contexts," says Spencer Levy, managing director for the company. "We took all of those initiatives that were going on locally and by product type and brought then under one umbrella. We're taking all of these services and creating a single point of contact for our clients in the distressed space."
Adache's approach is a bit different from its larger competitors. Instead of going to note holders to help value and distribute assets, it's working with the flood of potential buyers moving into South Florida in search of bulk purchases ranging from five units to 7,500 units.
"We've been dealing with buying groups," he says "As we've started getting more and more calls and were getting more calls from developers, some of the bankers we've worked with on the way are also saying they have these projects that are in trouble."