Steve Boyack, senior vice president of the Denver-based The Laramar Group, happened to be driving near Philadelphia with company CEO Dave Woodward a year ago when they decided to check out a property they sold in 2005.
They thought the owners of the 1,800-unit property on 135 acres called Lynnewood Garden Apartments were having problems. “We thought, this property has to be in trouble; it was bought at the height of the market,” Boyack says.
The visit spurred a call to some local contacts, when they discovered that the property was going through servicing. Though the deal was ultimately worked out through servicing (meaning Laramar didn’t end up taking on the third-party management of the asset), Laramar did help out on the due diligence end.
“We did the orginial renovation, and we knew what the issues were with a property that size,” Boyack says. “We were able to pull up several years’ worth of history, whether it was old budgets or original underwriting.”
Lynnewood Gardens isn’t the only property that Laramar has seen come back through the pipeline. In Orlando, it helped a servicer with due diligence on a property that it was originally slated to buy before the deal fell through. In Tampa, Fla., they just took over a property for a servicer that they once owned themselves, but sold five years ago.
Laramar isn’t the only company seeing deals it has managed in the past come back through the pipeline again. Ann Arbor, Mich.-based McKinley’s CEO Albert M. Berriz says the company has seen a number of properties it knows well reappear on the market.
“Those deals that were great for clients at the time became disastrous,” he says. “Those are the kinds of deals that we're seeing coming back through.”
Some former McKinley workouts are coming back through, as well. For instance, in 2007, the company was the receiver and workout operator for the 1,103-unit Lighthouse Bay Apartments in Tampa. “The deals that were workout exits at the height of the CMBS market have come back now for a second round,” Berriz says.
Boyack estimates that five or six of the properties the company once owned or managed have come back through servicing. But he thinks that there are probably others that he doesn’t even know about.
Despite this, not everyone is seeing former properties come back through the CMBS pipeline. “We haven’t seen anything come back around,” says Mark Fogelman, president and COO of Memphis, Tenn.-based Fogelman Management Group. “We’re till seeing decent volume, but we're not seeing things come back."