Brokerages Form Groups to Focus on Distressed Assets

By Teresa O’Dea Hein, Managing EditorChicago—Distressed property sales are a growth industry in this economy. While brokerage firms have already been selling more and more distressed assets this year, three national brokerage firms have recently created or expanded teams to streamline the handling of distressed deals.Apartment Realty Advisors (ARA) has formed a Distressed Assets Solutions Group (DASG), under the direction of Chicago-based ARA principal, Debbie Corson (pictured). Sperry Van Ness International has launched the Sperry Van Ness Asset Recovery Team (SVNART), led by David Gilmore, current managing director of Sperry Van Ness Accelerated Marketing Co. Inc., and Jerry Anderson, CCIM, former president and COO of Sperry Van Ness and current managing director of Sperry Van Ness Florida. Plus, Marcus & Millichap Real Estate Investment Services has expanded its Special Assets Services division, supervised by Bernard J. Haddigan, senior vice president and managing director. “We’re seeing more and more distressed deals,” Corson tells MHN. “A lot of it is mainly because the financing options are so limited. Plus, a lot of high loan-to-value loans at low interest rates are coming due and there just aren’t similar options for refinancing since underwriting is now much more conservative.”  Furthermore, she adds, “A lot of the buyers out there now are looking for these types of deals.”“We’re in a situation just like in the late 1980s where cash is going to be king, where you can’t go to the bank to get financing,” Gilmore tells MHN. “Everything comes in cycles. Distressed real estate has to be brought to a resolution so an economy can stabilize.”  Haddigan reports, “We have already sold more than 100 troubled assets this year, which are being well received by private investors, and expect to market a large volume of these properties over the next several months. This is driven by our lender clients’ need to clear their balance sheets and various types of funds, which are actively working to free up capital,” he adds. These firms provide a “single, full-service source” for the disposition of distressed real estate assets. The purpose of ARA’s specialty group is to provide responsive, professional and knowledgeable solutions to the myriad of servicers and lenders who are finding themselves burdened with distressed multi-housing assets including conventional multifamily, land, student and seniors housing.  ARA has a database of over 15,000 active purchasers,  Corson says.According to ARA’s Corson, “We started formally structuring this group after a wide array of our clients told us what they need:  micro market-level expertise, a slate of on-the-ground brokers who can tour properties immediately, comprehensive BOVs with 24-hour turnaround times, and access to buyers who can actually close.” ARA’s team is comprised of 27 specialists who broker only multi-housing properties, including conventional multifamily, land, student and seniors housing. SVNART will design and implement customized marketing plans for the repositioning and disposition of assets.  Services include:  broker opinion of value, customized marketing proposals, market research, property management, asset preservation, accelerated marketing/auction, sealed bid, loan/note sales, investment brokerage services, leasing services, and acquisitions.Given the constrained local economies and job losses, Corson notes that a lot of the distressed assets are going to be in the Midwest,  “although certainly a lot of others are in places like Florida, Phoenix and Atlanta.” Haddigan is also seeing high degrees of distressed assets for varied reasons in Florida, Texas, Nevada, Arizona, parts of Georgia and the Carolinas. “Busted condo deals, partial conversion projects that were caught by the housing market collapse, and, more recently, apartments and retail projects with rising vacancies, dominate the issues,” he observes. “In Texas, overbuilding of retail, apartments and office is the primary cause of distressed situations in that state.”