Article submitted by Bob A. Kirby Commercial Sales & Leasing Specialist with Saurage Rotenberg Commercial Real Estate

Investors See More Opportunities in Distressed Investment Coming To Market Ahead of This Year’s Glut of Maturing CRE Debt

By Mark Heschmeyer for CoStar Advisor NewsletterAugust 24, 2011

As the “extend and pretend” period of the Great Recession wanes into a period of true loan modifications, lenders and note holders appear to be forcing more distressed loans into the marketplace. And in turn, institutional investors, who were disappointed in the relatively slim pickings available in the distressed markets after raising enormous sums targeted for acquisition in 2009 and 2010, seem to be back on the hunt for more opportunities in investment-grade commercial real estate.

SilverLeaf Financial, a private equity firm specializing in buying distressed debt, this week acquired six non-performing notes secured by various apartment complexes in Georgia. The aggregate unpaid balance of the notes totals $16.6 million. Shane Baldwin, a principal of SilverLeaf, said depressed market conditions coupled with overleverage factored into the default.

“We liked the collateral, and felt comfortable with the location of the apartment complexes. Our investment platform incorporates a strategy in which we acquire loans and loan portfolios that are priced below the intrinsic value,” Baldwin said. “In the event we exhaust our work-out or restructuring options, the hope is we own the real estate at a very good value.”

Taking title to a distressed property figured extensively in another transaction this week, Global Fund Investments and MMG Equity Partners foreclosed on Harbour Village, a 112,886-square-foot shopping center in Jacksonville, FL, anchored by The Fresh Market and Stein Mart. After acquiring the conduit loan from a special servicer in an off-market transaction in April, the Global / MMG partnership set about the foreclosure process to take title to the property.

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Bob Kirby, a commercial leasing and sales consultant with Saurage Rotenberg Commercial Real Estate, has over 37 years of sales and management experience.  Licensed in Louisiana and Mississippi, Bob is a member of the Mississippi Commercial Association of REALTORS® (MCAR); the Greater Baton Rouge Association of REALTORS® Commercial Investment Division; a candidate member of the Certified Commercial Investment Member Institute (CCIM); and an affiliate member of the National Association of REALTORS® (NAR) and NAR Commercial.

Saurage Rotenberg Commercial Real Estate is a member of the Baton Rouge Area Chamber of Commerce (BRAC); the West Baton Rouge Chamber of Commerce; the Baton Rouge Growth Coalition; the Baton Rouge Better Business Bureau; the Louisiana Commercial Data Base (LACDB); and the International Council of Shopping Centers (ICSC). Several agents, on an individual basis, are members of the Society of Industrial and Office Realtors® (SIOR), the Certified Commercial Investment Member Institute (CCIM); the National Association of REALTORS® (NAR); and the Greater Baton Rouge Association of REALTORS® Commercial Investment Division (CID).