As Number of Distressed Assets Grow, Broad Street Launches New Division
- May 01, 2009
With a trifecta of falling asset prices, a deep global recession and waves of loans coming up for refinancing in a Draconian lending environment, the roster of distressed commercial real estate assets is growing, as well as the number of companies seeing a market opportunity to pilot these assets through rough seas. Broad Street Development, an owner and manager of commercial and residential New York City properties, announced today it was entering the fray, launching an asset management equity investment arm. The new division will partner with institutional owners and lenders to provide asset management services, and has $500 million of equity to strategically position properties during this downturn. The new division is “scalable,” said Daniel Blanco (pictured), a principal at Broad Street Development. That is, Broad Street can put equity into a property, that could be spent on tenant improvements, for example, or an owner can hire the firm on a fee basis. Blanco said experience navigating troubled times should be attractive to many owners, who may not possess the experience or the expertise to survive this severe slump. “I cut my teeth in the real estate recession of the 90’s,” Blanco said. “It teaches you to become super efficient.” While his firm is open to opportunities across the country, it will primarily be what he called “New York centric.” He said Broad Street has the ability to launch aggressive leasing and tenant retention programs, and provide construction supervision and development services. Many Manhattan landlords are facing growing challenges due to the economic downturn, Blanco said. “There is a lot of sublease space that has come on the market,” Blanco said. In a recent report on distressed real estate assets from Real Capital Analytics, Manhattan had 17 office buildings that were in the distressed category, worth $4.6 billion. Overall, Real Capital classified 3,929 properties in the United States as distressed through the first quarter of this year, with a value of nearly $73 billion. Many firms have instituted divisions that specialize in distressed assets, across all property types. Just this month, Leisure Hotels Corp. and Leisure Real Estate Advisors announced that it was expanding its range of services for distressed hotel assets.