New CBRE Group Rides to the Rescue of Distressed Assets
- Nov 20, 2008
CB Richard Ellis Group Inc. has just kicked off its restructuring services group to provide one-stop shopping for clients in need of services to address the growing pool of distressed commercial real estate assets. CBRE has been offering such services on a regional level, but the new entity allows the company to accommodate needs on a national platform. The restructuring services group consolidates all relevant services into a singular division, without internal overlap. The company said it is is uniquely qualified to offer such services on a national plane given its longstanding proficiency in tackling issues surrounding distressed assets, its international staff of 29,000 and status as the biggest commercial real estate services firm in the world in terms of 2007 revenue. “We can underwrite it, we can manage it, and we can sell it,” CBRE senior managing director Spencer Levy, who heads up the new group, told CPN. “We want to add value to assets throughout their life cycle. However, whether it’s a loan or wholly owned real estate, our primary goal is to manage assets so they don’t go into default. Traditionally, our asset services group maximizes value for clients. but there has to be analysis; is it better to hold, in which case we’d rely on our property management and leasing groups to enhance value, or is it better to sell, in which case we would employ our investment properties or loan sales groups. Whatever execution that will bring the maximum value to clients, we have the resources to bring to bear.” With the restructuring services group, the door is open to a variety of clientele, including banks, insurance companies and savings & loans concerns. “Right now, we’re doing some work for IndyMac on the West Coast,” Levy noted. Additionally, no commercial real estate asset–from distressed loans to foreclosed properties–is off limits. CBRE handles a substantial amount of work in distressed land through its land group, which is operated out of the Minneapolis office. “Land and condos are assets that are really undergoing distress right now, but there will be a shift into core asset types if the fundamentals continue to deteriorate.” Given the frigid lending market and a merciless economy, the establishment of a national distressed property services vehicle like CBRE’s restructuring services group makes all the sense in the world. But, is there a long-term future for such an entity? “It will have a life that lasts as long as distressed assets last,” Levy said. “And it will be a seamless transition from the current market to a better market, as there will always be a need for distressed asset services, even in the best market.” Headquartered in Los Angeles, CBRE offers real estate services including strategic advice, facilities and project management, mortgage banking and valuation, development services and investment management. On Nov. 14, news emerged that CBRE underwriters had exercised their option to by 7.5 million additional shares of Class A common stock at $3.77 per share, a move that will result in anticipated net proceeds of approximately $207.1 million, which will be utilized for general corporate purposes.