[dp]

Commercial Property Receivership

Challenges and Opportunities
Brecht Palombo and Greg Trotter of Commercial Building Consultants

PODCAST
TRANSCRIPT
www.distressedpro.com

1 of 14 Wednesday, January 6, 2010 | distressedpro.com

Brecht:

Good
morning.
This
is
Brecht
Palombo
with

www.distressedpro.com
and
thanks
for
being
on
the
line
today.
Today
I

have
Greg
Tro>er
of
commercial
building
consultants.
He
is
based
in

Orlando,
Florida.
He
has
been
out
there
working
with
lenders
and

developers
for
more
than
ten
years
and
the
reason
why
I
have
him
on
the

phone
today
is
because
I
have
been
geDng
a
lot
of
requests
from

members
for
informaFon
on
receivership
and
on
property
preservaFon.
So

Greg
has
been
in
that
business
for
more
than
ten
years.
He
is
doing
deals

all
over
the
country
and
so
we
are
psyched
to
have
him
on
the
phone
and

so
without
further
ado,
Greg,
welcome.
How
are
you
doing?

Greg:

Really
good
thanks.
Thanks
for
calling.
This
is
an
issue
and
an
area

that
is
really
near
and
dear
to
my
heart
and
I
fully
enjoy
this
area
of
the

industry
is
asset
management
and
asset
preservaFon.

Brecht:

Yeah.

Greg:

I
started
31
years
ago
in
commercial
construcFon
and
I
found
that

the
last
ten
years
have
been
really
either
monitoring
assets,
preserving

assets,
or
turning
around
properFes
and
projects
for
various
lenders
and

developers
and
it
is
a
lot
of
fun.
We
say
it
around
here
as
we
get
paid
to

eat
ice
cream.
Everything
is
geDng
be>er
in
Orlando
and
that
is
the
report

this
morning.

Brecht:

Well
that
is
good.
So,
31
years,
that
means
you
came
through
sort

of
our
first
major
real
estate
crunch
in
the
late
80s
and
90s.
Tell
me
a
li>le

bit
about
what
you
were
doing
then
and
maybe
a
li>le
bit
about
how

today
differs
or
is
it
the
same.

Greg:

Sure.
I
think
that
I
have
a
real
interesFng
perspecFve
because
I
got

out
of
school
in
1978
and
I
was
out
there
during
the
1980
to
1982
financial

distress.
You
are
in
one
of
the
areas
of
the
country
that
was
really
hit
hard.

That
would
be
New
England,
northern
New
York,
New
York
area,
as
well
as

parts
of
the
Midwest.
And
since
I
was
in
construcFon
and
development,

the
only
thing
available
to
do
at
that
point
in
Fme,
the
only
projects
you

could
work
on
was
government
projects
where
there
was
a
subsidized

housing,
elderly
housing,
medium
income
housing,
but
basically,
what
it

was
the
only
thing
coming
out
of
the
ground
during
that
period.
The
only

thing
that
could
get
any
money
was
subsidized
housing
projects
and
so

that
is
all
I
was
doing
then
was
this
mulF‐family
product
so
I
got
to
become

really
comfortable
and
familiar
with
it
back
then.
Fortunately
we
kind
of

climbed
out
of
it
in
1982.
And
then
what
happens
from
there
is
you
go

from
student
housing
and
then
you
go
to
industrial
and
commercial
and


2 of 14 Wednesday, January 6, 2010 | distressedpro.com

office
and
you
go
through
these
various
cycles
in
the
construcFon
industry

and
you
follow
them
and
you
all
of
a
sudden
become
expert
in
all
areas

and
here
we
are
today
in
another
crunch.

Brecht:

Right


Greg:

As
far
as
how
they
compare,
back
then,
for
me
it
does
not
differ
a

whole
lot,
but
believe
me
the
changes
that
have
occurred
between
the

1980
to
1982
and
where
we
are
now‐
this
one
is
much
more
pervasive.

This
is
a
huge
financial
collapse
in
the
country
and
worldwide
and
it
has

affected
everybody.
I
do
not
care
if
you
are
an
airline;
you
are
a
retailer,
a

publisher,
or
a
jail
bondsman.
Your
business
is
down.
Funny
enough
but
I

am
talking
everybody
has
been
affected
by
this
change
in
market.
And
it
is

staggering
because
before,
in
the
'80‐'82,
it
was
developers,
real
estate

banks,
some
high‐tech.
There
were
some
weaknesses
in
some
other

sectors
of
the
economy,
but
it
was
not
everybody
like
it
is
in
this
one
and

so
this
is
a
biggy.
This
is
the
worst
I
have
ever
seen
it.

Brecht:

Right,
well
I
am
hearing
that
a
lot.
Tell
me
a
li>le
bit
about
what

you
were
doing
during
the
run
up
just
unFl
sort
of
late
'90s
or
2000

through
I
guess
2007
or
2008
when
we
sort
of
peaked
and
realized
we

were
in
the
crunch‐
what
were
you
doing
then?

Greg:

This
is
the
great
thing
is
that
as
a
result
of
the
problems
in
the

'80s‐'82,
what
did
we
learn?
We
learned
that
projects
were
geDng
funded

that
were
in
fact
not
happening.
Literally
pieces
of
land
were
siDng
there

and
banks
were
geDng
applicaFons
for
payment
for
projects
being
built

where
they
were
not
being
built.
What
happened
as
a
result
of
that
is
my

job
was
created.
Now,
first
of
all,
I
went
through
that
crunch
and
I
was

really
hurt
hard.
Between
the
1980
and
the
'82
crunch
and
then
the
1990

crunch,
I
mean
I
was
wiped
out
and
I
think
if
you
live
that,
you
really

appreciate
your
job
when
it
is
created
as
a
result
of
that.
So
my
job,
day
in

and
day
out,
for
say
1999
through
say
2007
was
doing
due
diligence
and

what
is
that.
That
means
if
you
are
buying
a
dealership,
apartment
or

hotel,
a
restaurant,
apartment
complex,
or
a
whole
poraolio
of
them,
you

need
to
evaluate
all
the
physical
aspects
of
the
property.
That
means
the

roof,
mechanical,
electrical,
plumbing,
pipe
drainage,
parking,
lighFng,
that

sort
of
thing
and
the
lender
needs
that
and
by
the
way,
the
ulFmate
owner

needs
to
know
what
is
going
on
and
they
need
the
capital
planning
budget

of
what
he
needs
to
do
for
the
next
twelve
years
during
the
term
of
the

loan.
We
do
that
all
day
long.
So
we
would
do
what
we
call
property

condiFon
assessments.
Along
with
that
you
do
environmental
site


3 of 14 Wednesday, January 6, 2010 | distressedpro.com

assessments
to
make
sure
there
is
no
issue
with
the
property
from
nearby

gas
staFons
and
that
sort
of
thing.

Brecht:

Sure,
21‐E.

Greg:

I
am
sorry‐‐?

Brecht:

21‐E
studies?

Greg:

Exactly,
so
we‐
hundreds
each
year.
Along
with
that,
what
happens
is

we
also
do
a
lot
of
bank
draws
where
we
are
monitoring
construcFon
as
it

is
either
something
geDng
renovated
or
building
ground
up.
And
all
of
a

sudden
we
are
this
huge
data
cruncher
of
knowing
what
the
prices
of

everything
that
is
going
on.
we
are
talking
to
various
part
sectors
of
the

industry
because
we
are
just
siDng
on
the
site
talking
to
owners,
buyers,

contractors,
developers
and
we
are
doing
this
all
around
the
country.
Why

would
we
do
it
all
around
the
country
is
that
eventually
lenders,
if
they

really
want
to
know
the
hard
truth
of
what
is
going
on
with
the
project
and

that
there
is
not
going
to
be
an
issue
with
it
going
to
permanent
financing.

They
want
someone
there
who
cares,
picks
up
the
li>le
nuances.
Is
there

an
issue?
Is
there
not
an
issue?
Is
this
thing
going
to
be
a
successful

project?
Is
it
going
to
make
money?
We
are
the
eyes
and
ears
for
the

lenders
out
in
the
field.

Brecht:

Okay.

Greg:

It
is
a
wonderful
job,
because
you
get
to
be
in
the
trades,
go
figure

out
what
is
going
on
and
you
have
great
cost
data
of
what
is
going
on

month
to
month
to
month
on
all
16
divisions
of
construcFon.

Brecht:

So
that
brings
you
up
to
the
credit
crunch.
And
as
we
know,
there

are
lots
of
changes
have
happened
since
then
just
in
terms
of
who
is
able

to
get
money
for
what.
And
so
what
has
changed
for
you
or
what
are
you

doing
different
in
your
business
now
or
what
are
people
asking
you
to
do

differently
than
you
were
doing
before?

Greg:

Well
it
has
really
dramaFcally
changed.
I
mean
we
are
talking
people

just
shaking
their
heads
and
wondering
if
their
phone
works.
Going
back
to

the
‐there
is
even
default
in
good
Fmes.
There
is
going
to
be
problems
with

various
assets
that
lenders
have
and
since
we
were
on
the
field,
our
boots

were
on
the
ground,
we
would
go
in
and
work
out
various
projects
for

lenders
who
the
developer
got
put
in
prison
or
lec
the
project
or
just
did

not
get
it
or
had
a
problem
with
the
contractor.
We
do
various
work
out


4 of 14 Wednesday, January 6, 2010 | distressedpro.com

situaFons
where
we
would
just
get
everybody
to
hold
hands
together.
We

would
go
into
projects
that
literally,
one
famous
here
in
Orlando,
where

the
project
just
sort
of
sat
there
in
the
high
drive
area
and
it
was
really

quite
an
eyesore
half
completed
and
we
were
assigned
to
take
care
of
that

project
for
a
lender
out
of
New
York
as
it
went
through
bankruptcy
and
so

forth.
It
is
kind
of
a
fun
story.
Lenders
usually
do
not
end
up
on
the
posiFve

when
a
property
goes
to
REO.
But
all
said
and
done,
because
of
the

market,
because
it
is
a
different
era
than
right
now,
the
lender
gets
all
its

fees,
gets
full
proceeds
back,
and
ends
up
totally
whole
including
all
fees

from
legal
fees,
interest
fees,
late
interest
fees,
on
and
on
and
they
also
say

that
helped
my
career
because
that
was
1999‐2000.
for
a
lender
to
end
up

whole
on
a
project
that
went
to
REO
pre>y
much
means
they
thought
I

walked
on
water.
From
there,
you
have
one
success
leads
to
another
leads

to
another
and
so
it
was
a
lot
of
fun
to
sort
of
put
the
various
due
diligence

we
were
doing,
the
bank
draw
work
we
were
doing,
and
helping
lenders,

developers
through
problem
Fmes
on
their
project
in
the
good
Fmes.

What
happened
then
is
when
the
brakes
got
hit
and
I
am
going
to
say

around
August
of
2007,
when
it
was
really
obvious
to
us,
we
were
going

into
full‐blown
REO
work.
Give
you
an
example
of
one
project
where
my

wife
and
I
packed
up
the
house
and
moved
onto
a
project
in
south
Florida

because
these
lenders
did
not
have
any
confidence
with
regard
to
what

the
developer
was
going
to
do.
So
there
was
a
forbearance
agreement

signed
and
the
keys
were
turned
over
to
me
and
the
lenders
wanted
the

thing
completed
and
we
lived
on
the
project
and
completed
it.

Brecht:

Wow.
That
is
funny.

Greg:

It
was
a
lot
of
fun,
because
right
in
the
middle
of
Biscayne
Bay
and
it

was
a
tough
assignment,
but
someone
had
to
do
it.

Brecht:

I
am
sorry.
I
was
just
going
to
say
that
is
a
great
segue
for
what
I

want
to
talk
about‐
is
a
li>le
bit
about
the
mechanics
of
receivership.
And
I

know
you
are
probably
not
always
geDng
moved
into
a
project,
but
what

happens
‐at
what
point
does
the
asset
manager
say
I
have
to
get
Greg
on

the
phone
and
then
acer
they
make
that
decision,
kind
of
walk
us
through

what
happens.
What
is
involved?
What
is
the
goal?
What
is
the
typical

assignment?

Greg:

The
good
news
is
they
all
vary.
They
really
do
and
what
happens
is

an
asset
manager
sees
a
problem
loan
and
he
is
monitoring
it
and
all
of
a

sudden
it
looks
like
the
developer
is
not
going
to
pay
anymore,
has
lec

town,
whatever
it
is.
He
gets
some
sort
of
idea
that
he
is
stuck
with
this

property.
What
happens
with
that
file
is
then
it
is
looked
over
and
quite


5 of 14 Wednesday, January 6, 2010 | distressedpro.com

honestly,
what
we
see
is
that
a
lot
of
these
folks
that
are
stuck
with
this

situaFon
have
had
no
experience
with
REO.
They
are
moved
from
another

part
of
the
bank,
underwriFng
you
know
maybe
where
the
loan
originated.

They
have
no
clue
of
what
is
going
on
or
how
to
really
approach
this
and

they
have
so
many
of
these
files
that
‐
I
have
asset
managers
that
excuse

themselves
for
all
the
boxes
in
their
office
not
files,
but
boxes
of
files
of

REO
situaFons.
So
they
are
really
overcome
and
they
want
to
know
sort
of

what
is
out
there
and
what
they
have.
That
is
the
puzzle
you
get
to
solve
is

that
okay,
where
do
we
really
sit
with
the
contractor,
with
liens,
with
the

authoriFes
having
jurisdicFon
meaning
the
building
department
and
the

housing
department,
whomever,
and
what
do
we
have
to
do
to
right
this

ship.
What
does
it
cost
to
complete?
What
were
the
problems?
Why
did

they
stop?
Was
it
a
problem
with
unforeseen
condiFons
or
was
it
simply

they
ran
out
of
money?
A
lot
of
Fmes
it
is
not
that
project
that
is
the

problem.
It
was
another
project
that
really
sucked
the
life
out
of
the

developer
and/or
lender
or
whatever
and
Fpped
the
boat
over,
if
you
will.

So
we
offer
that
sort
of
soc
sell
service
where
the
lender‐
our
clients
drive

the
bus,
meaning
they
can
call
up
and
say
what
do
we
have
at
such
and

such
an
address.
Or,
they
can
do
it
fully
engaged
where
it
is
their
lawyer

who
puts
us
as
a
court
appointed
receiver.
And
what
that
would
mean
is

you
go
in
front
of
a
judge
and
say
Mr.
Judge,
this
parFcular
individual
has
a

loan
on
such
and
such
property.
They
have
obviously
lec
the
property

defaulted
for
the
last
twelve
to
twenty‐four
months
on
this
loan,
and
it
is

just
siDng
there
as
wasted
property,
is
an
issue
with
crime
and
safety,

blah,
blah,
blah.
What
happens
is
the
judge
either
agrees
or
disagrees
with

it,
but
typically
they
do
when
it
gets
to
that
point.
And
then
CBC,

Commercial
Building
Consultants
is
listed
as
the
court
appointed
receiver.

And
our
responsibility
is
to
make
it
safe,
make
sure
no
one
jumps
in
the

pool,
walks
off
the
pier,
if
you
will,
analyzes
the
building
itself
and
sees

what
needs
it
has
to
make
sure
it
is
preserved.
And
in
some
cases,
when

we
do
a
cost
to
complete
on
an
asset,
it
looks
like
you
are
a
kiss
away
from

geDng
this
thing
completed
and
then
you
have
a
much
more
valuable

asset
with
X‐Y‐Z
amount
of
input
from
the
bank
as
far
as
proceeds
you
had

set
aside
for
this
loan
anyways.
We
can
get
the
building
stabilized
and
up

and
running
and
maybe
you
can
sell
it,
lease
it,
or
whatever.
We
work
as

consultants.
Our
job
is
to
take
care
of
the
bank
to
preserve
or
maybe
even

improve
the
asset
and
help
them
out.
I
sit
across
from
these
folks
all
day

long
and
they
just
look
at
me
and
say
I
have
ten
more
files
on
my
desk

today
than
I
did
yesterday
and
I
am
a
li>le
overcome
here
and
I
do
not

have
a
lot
of
road
Fme
to
go
around
and
check
all
this.
There
is
more
and

more
of
a
demand
for
this
as
Fme
goes
on.

6 of 14 Wednesday, January 6, 2010 | distressedpro.com

Brecht:

Right,
so
it
sounds
like
most
of
the
Fme
you
would
be
engaged

pre‐foreclosure.
I
know
at
least
in
my
neck
of
the
woods
would
typically

happens
when
commercial
property
is
in
default
is
that
as
the
lender

moves
to
foreclose,
there
is
a
bankruptcy
filing.
A
large
percentage
of
the

Fme,
70%
to
80%
of
the
Fme
the
debtor
will
file
a
Chapter
11,
I
should
say

the
owner
would
file
a
Chapter
11.
Is
that
the
Fmeframe
when
you
get

called
in?

Greg:

Well,
it
all
works
with
the
loan
documents.
When
you
sign
a
loan
as

a
developer
for
owning
a
property
or
developing
a
property,
there
is
a

number
of
kicks
in
there
that
all
of
a
sudden
puts
you
in
default
whether
it

is
not
paying
on
Fme,
not
reporFng
on
Fme,
not
giving
the
informaFon
as

far
as
what
your
rent
rules
are
your
revenue.
There
are
a
number
of
ways

that
you
can
get
into
default
and
depending
on
how
aggressive
and
how

the
market
is.
The
bank
will
either
sit
back
or
ignore
problems
like
what
is

happening
right
now,
and/or
in
the
good
days,
they
just
pulled
the
plug

and
say
all
right,
Mr.
Developer,
you
are
in
default
and
we
are
taking
the

property
back
and
we
are
going
to
fix
it.
It
is
all
dependent
upon
the

market
and
the
situaFon
and
really
the
experience
of
the
asset
manager

themselves
and
who
is
standing
above
them
with
a
direcFve.
That
would

also
be
the
Fed.

Brecht:

Right,
but
it
sounds
like
‐‐

Greg:

SomeFmes
the
FDIC
is
what
drives
the
bus.

Brecht:

It
sounds
like
you
are
called
in
fairly
early
though,
as
soon
as
the

property
is
at
some
level
of
default,
they
want
you
to
get
a
handle
on
kind

of
what
is
going
on
over
there.
Is
that
accurate?

Greg:

That
is
the
best
way.
To
be
honest
with
you,
that
is
not
accurate
at

all.
it
is
one
of
those
things
where
if
you
called
us
last
week
baby,
you

would
be
in
a
lot
be>er
shape
than
you
are
this
week
and
it
is
so
true,

because
let
us
go
back
to
the
scenario
of
the
two‐year
scenario.
Let
us
say

that‐
and
we
are
talking
a
large
bank
that
everybody
knows.
Certainly
a

large
regional
bank
had
been
holding
onto
a
property
and
not
pulling
us
in,

maybe
a
year
late.
They
could
have
easily
done
this
a
long
Fme
ago
when

the
market
was
be>er.
It
was
more
interest
in
taking
a
risk.
There
was

more
equity
out
there
to
play
with,
therefore
they
could
have
cleaned

their
slate
of
this
parFcular
asset
but
they
did
not
want
to
acknowledge
it.

They
did
not
want
to
say
that
this
is
a
non‐performing
loan.
These
are
the

effects
of
their
operaFon
and
it
is
hard
to
be
in
their
posiFon
right
now.

One
of
the
worst
things
in
the
world
as
far
as
a
job
to
do‐
go>a
be
a


7 of 14 Wednesday, January 6, 2010 | distressedpro.com

banker.
They
have
to
acknowledge
they
have
an
issue
and
then
work
with

it
and
if
they
have
to
expend
some
money
into
it
and
that
is
difficult
when

you
have
a
lot
of
defaulted
loans.

Brecht:

So
what
you
are
seeing
now
and
I
am
hearing
this
from
a
lot
of

folks
sFll,
is
lenders
delaying
the
paying.

Greg:

Oh,
absolutely.
We
have
properFes
that
they
have
not
seen

payments
on
for
a
long
Fme.
These
are
operaFonal
properFes.
Let
us
say

mulF‐family
or
hotels,
or
restaurants
or
whatever.
And
they
have
not
seen

any
revenue
come
from
that
loan
for
a
year
or
two
or
whatever.
They
are

allowing
the
borrower
to
sit
there
and
operate
that
property
and
pay
the

uFliFes
and
keep
it
going
because
that
means
they
do
not
have
to
expend

all
that
effort.
Really
the
best
person
to
take
care
of
that
property
is
the

one
that
has
been
operaFng
it.
So
right
now,
they
are
kind
of
kicking
the

can
down
the
road
and
sort
of
going
okay,
we
are
going
to
ignore
that

because
we
have
a
lot
of
other
problems
right
now
and
at
least
that

property
is
hot,
warm,
and
operaFonal.
It
is
moving
along.
We
are
not

going
to
deal
with
him/her
unFl
later
and
see
what
happens.
That
is
the

big
quesFon.
What
is
going
to
happen?

Brecht:

One
of
the
quesFons
I
had
from
a
member
without
geDng
too

specific.
I
do
not
want
to
get
into
rates
or
amounts
or
anything
like
that,

but
how
do
you
charge
for
your
services?
It
is
a
retainer
type
of
thing
or
is

it
based
on‐
I
guess
just
tell
us
how
you
figure
your
structure.

Greg:

Well,
sure.
Really
all
we
have
is
Fme.
That
is
what
we
do.
We
look
at

the
Fme
we
are
going
to
be
involved
with
the
property.
There
is
a
lot
of

risk.
We
will
possible
hire
fence
people,
roof
people,
on
up
to
full‐blown

total
renovaFon
of
a
property
so
we
know
that
there
would
be
a
cost
to

complete
if
that
is
required.
We
also
look
at
our
Fme
and
effort
that
we

are
going
to
put
into
the
property
and
sort
of
give
them
an
idea
of
budget.

GeDng
a
retainer
is
a
really
good
idea
and
I
would
not
have
said
that
a

year
ago
or
two
years
ago,
but
what
happens
is
that
we
get
to
an

assignment
and
like
some
people
have
said
to
me,
Greg
it
is
like
the
cavalry

has
come.
You
can
imagine
the
property
siDng
foul
for
a
year
or
two
and

all
of
a
sudden,
zip,
zip,
trucks,
fences,
ladders,
all
sorts
of
things

happening
on
a
property.
And
they
go
my
god,
it
is
like
overnight
this
thing

is
going
crazy
and
they
are
usually‐
the
neighbors
are
really
happy
to
see

some
acFvity
on
a
property
and
then
we
have
found
that
if
we
do
not
get
a

retainer,
in
some
cases
we
are
not
geDng
paid
for
120
or
more
days
later.

So
I
have
all
the
risk.
I
have
all
this
money
going
out
and
you
would
think
a

bank
could
cut
you
a
check
for
what
you
are
doing
to
cover
their
risk
and
it


8 of 14 Wednesday, January 6, 2010 | distressedpro.com

turns
out‐.
This
is
a
heads‐up
for
anybody
doing
this
is
how
are
you
going

to
get
paid
and
is
it
going
to
be
on
a
Fmely
basis?
Because
watch
this.
Let

us
say
I
have
one
property
where
a
boat
sank
off
in
a
canal
right
in
front
of

the
property.
It
was
Fed
up
to
the
dock.
Who
are
they
going
to
call?
They

are
going
to
call
the
court‐appointed
receiver.
What
is
my
liability?
Well,

that
boat
that
someone
arbitrarily
decided
to
hook
to
this
dock
could
be

up
to
ten
thousand
dollars
a
day
for
environmental
issues.
I
am
looking
at
a

lot
of
liability
and
for
the
bank
not
to
take
care
of
me
because
I
am
taking

care
of
them
is
rather
odd,
but
you
really
need
to
figure
out‐.
And
you

could
be
in
front
of
a
senior
vice‐president
and
he
is
engaging
you
to
be
a

receiver
but
he
has
several
layers
above
him
that
are
dealing
with
a
lot
of

problems
and
issues
and
controlling
the
purse
strings
where
you
think
you

are
dealing
with
the
guy
that
can
authorize
a
check.
In
this
case,
all
bets

are
off.
It
is
2009‐2010
now,
new
deal.
He
cannot
cut
the
check
so
you

need
assurances
you
are
going
to
get
paid.

Brecht:

Wow.
So
you
menFoned
a
senior
vice‐president.
Let
me
just
ask

you
a
li>le
bit
about
that.
First
off,
what
types
of
lenders
or
banks
are
you

working
with
mostly?
Are
they
local
or
naFonal?
Kind
of
give
me
the

landscape
there.

Greg:

Locally,
we
probably
work
with
three
lenders
that
everyone
is

familiar
with
in
the
Orlando
area.
We
are
working
with
a
few
large
regional 

banks
and
a
lot
of
our
stuff
has
to
do
with
private
banking.
Private
banking

is
where
it
is
not
a
convenFonal
loan.
Private
money,
if
you
will,
is
put
up

to
do
a
project
so
it
is
a
higher
interest
rate
and
usually
higher
risk.
So

what
is
going
to
be
a
problem
child
in
a
market
like
this
would
be
the

private
banking.
And
quite
honestly,
they
are
more
interesFng.
They
are

not
a
7‐11
coming
out
of
the
ground.
They
are
a
mulF‐family
with
a

renovaFon
component
and
a
this
and
a
that.
We
do
a
lot
of
workouts
in

the
private
banking
arena
day
in
and
day
out.
But
it
is
probably
about
80%

private
banking
and
then
20%
just
convenFonal
either
local
or
regional

banks.

Brecht:

Okay.
So
what
is
a
typical
Ftle
for
somebody
who
is
your
decision‐
making
contact
at
a
local
or
regional
bank?

Greg:

Special
assets
servicer,
that
sort
of
thing.
Usually
it
is
a
special
asset

manager
is
the
guy
you
want
to
talk
to,
is
the
guy
or
gal
that
you
want
to

get
in
front
of.
what
I
have
found
is
and
it
is
interesFng
is
that
there
could

be
four
people
in
an
office
and
a
special
asset
management
office
and
they

are
just
geDng
deluged
with
files
and
boxes
of
files
and
they
do
not
even

know
how
to
come
up
for
air
and
they
do
need
help.
They
have
not


9 of 14 Wednesday, January 6, 2010 | distressedpro.com

acknowledged
in
some
cases
or
have
go>en
the
authorizaFon
to
get
the

help,
but
they
are
the
one
you
want
to
make
the
relaFonship
with.

Brecht:

So
would
you
say
that
there
is
a
parFcular
asset
type
that
is
your

focus
or
your
specialty?

Greg:

Well,
you
know,
there
clearly
is
and
it
is
really
someFmes
the
most

difficult
and
that
is
mulF‐family.
Through
my
enFre
career,
you
would
like

to
think
that
you
are
going
to
move
on
to
different
asset
types
but
I
have

worked
on
banks.
I
have
worked
on
a
lot
of
car
dealerships.
I
have
done
a

lot
of
hotels,
but
year
in
and
year
out,
the
mulFtudes
of
mulF‐family
work

that
we
do
is
just
incredible
and
up
to
and
including
this
one
project
that

we
did
which
was
a
poraolio
worth
1.2
billion.
And
it
was
basically
297

different
apartment
communiFes
between
Orlando
to
Michigan
and
it
is

hard
to
not
drive
down
the
street
and
run
into
one
of
that
poraolio.
It
is

mulF‐family,
mulF‐family,
mulF‐family
and
then
like
this
week
I
worked
on

an
aircrac
hangar
and
all
of
a
sudden
you
are
working
on
retail
building

and
then
back
to
mulF‐family.
It
is
predominantly
apartments.
People
have

to
live
somewhere.

Brecht:

So
what
do
you
see
as
the
biggest
challenge
facing
I
guess
two

groups?
One
is
the
mulF‐family
investor
and
second
would
be
lenders
on

mulF‐families.
What
are
they
facing
today?

Greg:

Well,
there
was
a
great
arFcle.
I
am
not
sure
if
you
saw
it.
We
have

the
Orlando
Business
Journal
here
in
Orlando
that
is
predominantly

focused
on
commercial
real
estate
and
then
you
look
around
and
you
look

at
the
various
other
ones
and
there
is
a
Nashville
Business
Journal
that

came
out
yesterday
with
a
great
arFcle
by
Eric
Snyder
and
the
heading
is

'Analysts
tell
developers
to
play
golf
in
2010.'
Now
that
kind
of
says
it
all.
I

mean‐
and
you
would
laugh
but
I
know
people
who
are
literally
doing
that

where
they
have
had
a
great
experience
mode.
They
should
be
geDng

money
but
there
is
no
money
out
there
from
convenFonal
lending
so

people
are
literally
packing
up
and
coming
to
Florida
for
extended
long‐
term
winter
to
spring
vacaFons
and
I
know
that
for
a
fact.
I
am
siDng
right

here.
So
what
is
happening
is
there
is
no
money
out
there
whatsoever
to

do
anything
except
for
mulF‐family,
Fannie,
Freddie,
FHA,
HUD‐type

situaFons
and
that
is
the
only
money
out
there
period.
If
you
are
focusing

on
developing,
the
only
thing
you
can
do
is
mulF‐family.
You
cannot
buy

retail.
You
cannot
buy
a
car
dealership
unless
you
have
money.
That
is
what

is
ironic
about
this
situaFon.
If
you
have
cash,
you
can
buy
a
property
for

50%,
40%
of
the
actual
cost
of
duplicaFng
that
property.
I
mean
there
are


10 of 14 Wednesday, January 6, 2010 | distressedpro.com

huge
opportuniFes
out
there.
I
would
encourage
anyone
who
has
cash
to

get
into
the
market
and
you
have
a
lot
of
power.

Brecht:

What
would
you
say
to
the
banks
special
assets
groups
who
are

siDng
here
looking
at
defaulFng
mulF‐families?
Is
there
stuff
in
their

poraolio
now
or
‐‐?

Greg:

I
can
tell
you
there
is
a
property
right
down
the
street,
480
units.
It

was
like
a
B‐property,
if
you
will.
It
had
32
offers.
That
was
in
October.

Thirty‐two
offers,
so
you
are
talking
about
a
thirty
million
dollar
project

and
it
had
32
offers.
Call
it
22
legiFmate
offers.
There
is
a
lot
of
demand

out
there
for
people
to
buy
mulF‐family
so
if
you
have
one
that
is

somehow‐
.
I
have
been
to
projects
in
the
last
four
weeks
that
have
had

62%
occupancy
in
apartment
complex.
That
is
not
going
to
work.
You
are

not
going
to
cut
it.
So
there
are
opportuniFes
there
to
turn
around
an

asset
like
that
by
geDng
good
markeFng,
good
property
management,
get

that
thing
up
to
where
it
can
show
some
revenue,
and
then
you
definitely

could
market
that
and
there
is
an
appeFte
out
there
for
ground
up
and

there
is
an
appeFte
there
for
purchasing
exisFng,
operaFng
mulF‐family

projects.

Brecht:

Move
fast,
get
the
property
into
saleable
condiFon,
and
then

listen
to
the
market
it
sounds
like.

Greg:

Absolutely.
There
is
a
lot
of
analysis
that
goes
into
that.
This

parFcular
locaFon
we
are
talking
about
is
a
really
interesFng
sub‐market.

There
is
a
school
nearby
that
is
in
a
huge
growth
mode.
You
look
at
each

one
individually
and
if
you
are
looking
at
any
property
for
long,
however

you
are
going
to
get
the
money,
the
key
thing
right
now
is
revenue.
What
is

the
revenue
being
thrown
off
by
that
property?
What
are
your
expenses?

What
is
the
income?
Can
you
pay
the
loan?
People,
like
I
said,
they
need
to

live
somewhere
and
there
are
some
areas
that
are
really
tough
to
fill

apartment
complex,
but
there
are
a
lot
of
great
ones
too.
There
is
clearly

opportunity
out
there.

Brecht:

So,
if
you
could
just
use
your
crystal
ball
and
tell
us
what
you
see,

12
or
24
months
from
now,
or
if
not
then,
when
do
you
see
a
return
to

posiFve
movement.
Just
tell
us
what
you
see.

Greg:

We
are
in
posiFve
movement
right
now.
Let
us
look
at
the

residenFal
side.
We
have
a
lot
more
acFvity
this
year
than
last
year.
We

have
a
residenFal
component
within
our
firm
and
we
have
seen
30%

increase
in
volume
this
year
than
last
year.
So
you
kind
of
look
at
the


11 of 14 Wednesday, January 6, 2010 | distressedpro.com

residenFal
market
and
say
what
is
going
to
happen
to
the
commercial

market?
It
is
going
to
do
the
exact
same
thing.
We
are
going
to
see
in
2010

a
lot
more
pressure
from
FDIC
for
lenders
to
dump
property.
There
is
a

huge
amount
of
equity
on
the
sidelines
that
is
going
to
come
in
and
sweep

some
of
this
stuff
up,
because
they
understand
that
the
opportunity
is

now.
So
we
are
going
to
have
some
bank
failures
next
year.
We
are
going
to

have
a
lot
of
consolidaFon.
We
are
going
to
have
a
real
great
headline,

breaking
news
about
this,
that,
and
the
other
thing
that
are
great
to
sell

papers
as
far
as
failures.
And
then
we
are
going
to
come
out
the
other
side

and
I
would
say
that
in
probably
24
months
we
are
going
to
be
ramping
up

and
it
will
be
pre>y
much
back
to
normal.
Right
now
everybody
is
really

confused
as
to
what
our
administraFon
is
going
to
do
with
taxes
with

anything,
with
small
business.
And
what
I
see
and
what
I
saw
is
that

everyone
in
the
lending
area
and
development
area
was
frozen
for
several

months
or
maybe
even
a
year
where
they
could
not
do
anything
because

they
really
did
not
know
where
anything
was
going
acer
that
financial

collapse.
Now
we
are
seeing
clearly
and
I
pet
it
at
November
2009,
we

started
to
see
a
turnaround
where
everyone
is
more
accepFng
of
the

market,
more
accepFng
of
the
situaFon,
and
we
have
to
move
on.
That

demands
for
businesses
such
as
medical,
medical
supply,
medical
labs,

things
that
are
not
moving
along
they
are
purchasing
buildings.
They
are

starFng
to
invest
and
it
is
going
to
go
through
industry
sectors
to
get
back

to
where
we
are
all
comfortable
again
and
you
have
to
remember‐.
That
is

one
thing
I
can
tell
from
my
experiences
is
that
when
you
are
in
the
good

Fmes,
you
figure
they
are
never
going
to
end.
When
you
are
in
the
bad

Fmes
like
we
are
in
right
now,
you
never
see
that
there
is
going
to
be
any

light
at
the
end
of
this
tunnel.
Trust
me.
It
is
going
to
turn
around.
And
it

always
does
and
that
is
one
of
the
greatest
things
about
the
U.S.
of
A.
is

that
this
is
a
capital,
economy.
We
are
driven
to
pursue,
to
expand,
to

innovate
and
if
we
lose
that,
it
is
a
sad
thing,
but
I
do
not
see
that.
I
think

we
are
going
to
be
fine
in
24
to
28
months.

Brecht:

Well
yeah.
I
like
that
forecast.
Who
are
you
looking
to
work
with
or

network
with
out
there?
Who
would
you
like
to
hear
from
or
who
could
be

hearing
from
you?

Greg:

We
do
really
well
with
people
who
get
it.
They
are
lenders
who
see

opportunity
and
take
care
of
their
properFes
and
improving
their
assets
or

stabilizing
them.
People
who
want
creaFve
decisions
and
direcFon
and
if

they
want
us
to
grab
hold
of
a
property
and
steer
it
in
the
right
direcFon.
It

would
be
special
asset
managers.
It
would
be
developers
that
are
having
a

li>le
bit
of
a
problem
with
the
property.
We
are
problem
solvers.
We
are
a

li>le
bouFque
firm,
but
we
have
huge
resources.
Anyone
that
can
do
298


12 of 14 Wednesday, January 6, 2010 | distressedpro.com

apartment
complexes
in
two
months
for
purchase
can
certainly
get
their

hands
around
whatever
you
throw
at
us
and
we
have
had
well
over
a

decade
of
experience
doing
it.
I
just
went
to
Mobile,
Alabama
to
see
a

developer
and
he
needs
money.
He
needs
equity
for
a
really
sweet,

fantasFc
projects
which
are
mulF‐family,
HUD‐backed,
private
lender.
Wells

Fargo
is
ready
to
do
the
construcFon
financing,
ready
to
do
the
permanent

financing,
rates
lined
up
to
buy
this
sort
of
stuff.
He
just
needs
an
infusion

of
equity.
We
are
kind
of
stepping
outside
of
our
box
here
and
looking
at

opportuniFes
like
that
to
help
people
out
to
get
through
this.
We
need

more
people
that
are
really
interesFng,
challenging.
We
do
really
well
with

tough
clients,
but‐

Brecht:

Plenty
of
that
out
there
today.

Greg:

Right.
Anybody
who
is
really
interested
in
solving
a
problem,
they

should
call
us
and
we
will
come
up
with
some
soluFons.

Brecht:

All
right.
Thanks
so
much
for
being
on
the
call
today.
Anybody
with

a
ton
of
problems,
ha‐ha,
call
Greg
Tro>er
of
Commercial
Building

Consultants
based
in
Orlando,
Florida.
It
was
really
great
having
you
here.
I

hope
that
we
answered
a
lot
of
quesFons
for
folks
who
were
wondering

what
is
receivership
and
what
do
I
do
next
and
look
forward
to
some
more

of
this
and
look
forward
to
talking
to
you
again,
Greg.

Greg:

I
appreciate
it
and
I
enjoyed
talking
to
you.
Our
phone
number
here

in
Orlando
is
407‐447‐5881
and
you
can
go
to
our
website

www.commercialbuildingconsultants.com


Brecht:

Okay,
awesome.
Thank
you
Greg.

Greg:

Have
a
great
day.

13 of 14 Wednesday, January 6, 2010 | distressedpro.com

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