president. “They have asked us to go
through their entire portfolio and get a
new competitive market analysis for
each property. We have hired the most
qualified brokers in individual markets
and demonstrated that we are getting the
best information available to make sure
we don’t leave money on the table.”
Zion assets are going to market with
prices that can move a property in 60 to
90 days, Jeppesen adds. “If banks are
willing to take a hard look at their assets,
hit the market priced right and with the
best broker in every market, properties
are moving.”
The Colliers International office in
Memphis, Tennessee, has also worked
with a regional lender, First Tennessee
Bank, to sell off assets.
“The key for us on this distressed
stuff is getting all the information,” says
Andrew Cates, SIOR, a vice president
with Colliers International. “When we
have the information, we can quickly get
to the closing table instead of trying to
find someone who no longer works for
the company to get old reports. It’s the
biggest challenge. Our job is to figure
out all that information and put it in a
location where we can use it when trying
to sell a property.”
Equally important, Cates adds, is to
do the research on the buyer because
the seller wants to know the buyer is the
right person with whom to do business.
Different Metros, Different
Lender Responses
The Denver commercial real estate
market has stayed relatively healthy
compared to other cities, but the banks
remain cautious, and when properties
do go back to lenders, the overriding
approach is to be as flexible as possible.
Paul Kluck, SIOR, a vice president
with CB Richard Ellis in its Greenwood,
Colorado, office, gives this example as
to how banks are working with defaults.
“I sold a building about seven years go
to a customer and then the economy
went sour and so did his business. He got
into a position where he could no longer make payments on his loan,” Kluck
recalls.
The customer had paid $1.7 million
for a property with the mortgage at $1.5
million. With his business and the economy going bad, the property was no longer worth the value of the mortgage.
“It was a Small Business Administration
loan, so the bank went to the borrower,
who is my client to discuss the situation,”
Kluck says. “The client told the bank,
‘You can take the property back and
kick me out, or you can let me occupy
the property while Paul (Kluck) tries to
sell it.’ I told the bank the property was
now worth $1 million or less. The bank
said they would leave my client in the
property while I put the building on the
market.”
The key point here, says Kluck, is
that “lenders are realizing it’s better to
leave the borrower in place in the build-
ings to continue to maintain the property
so it doesn’t lose value.”
That’s a different approach from what
Paul Fogel, SIOR, CCIM, has been see-
ing as a vice president with the Karbank
Real Estate Co. in Kansas City, Missouri.
Fogel had a manufacturing client that
had bought a building in 2006 for $1.8
million with a loan of $1.4 million, so
the client had $400,000 worth of equity
in the property. Fogel, following the cli-
ent’s request, first put the property on the
market for $2.2 million, then dropped
the price to $1.8 million and finally to
$1.4 million. An offer came in at $1.1
million.
