- REO MANAGEMENT
ABOUT33’s Distressed Real Estate Services practice is designed and equipped to add value in distressed real estate transactions. Our experienced team of professionals includes former workout professionals, corporate finance consultants, investment bankers, and engineers. These individuals combine their diverse backgrounds to deliver unique and highly effective solutions to a variety of distressed real estate challenges. Our team is experienced with every asset class and has been involved in numerous cases with commercial, retail, multi-family and industrial properties all across the Midwest. Our philosophy in our Distressed Real Estate Services practice is to take a multi-tiered approach to asset management, which focuses on asset stabilization/enhancement, cost management, and income appreciation. We work with an array of financial institutions, both locally and nationally, including, but not limited to, banks, private equity firms, family offices and hedge funds. By leveraging the Company’s integrated service model approach, we are able to offer a broad range of solutions with highly competitive pricing structures.Our specific Distressed Real Estate Services practice areas include:
- REO Management
RECEIVERSHIP33 has assembled a team of experienced professionals with a collective 30+ years serving in distressed real estate and workout transactions. Our team has worked at highly respected firms in the distressed space, including Rally Capital Services, LLC and FTI Consulting, Inc., where we gained unique and diverse perspectives to address any type of challenge. We pride ourselves on our risk-mitigation approach to all assignments, which involves an expeditious stabilization protocol, regular and ongoing communication with clients and meticulous reporting. We understand the cost sensitivity that often accompanies these complex assignments and are successful in achieving cost efficiencies given our comprehensive resources in management, brokerage, and leasing under our integrated model.
SELECT CASE STUDIES
BUCKTOWN & WICKER PARK PORTFOLIO33 was retained by a local bank in Chicago to consult on its largest distressed portfolio of assets. The two mixed use buildings in this portfolio had numerous issues including vacancy, unpaid vendors, confused and frustrated tenants, to go along with an extremely contentious dispute between the borrower and lender. Through this tumultuous time, 33 optimized these assets by increasing residential occupancy in both buildings to 100% in 30 days, leasing the commercial spaces in under 6 months and increasing the buildings’ income by 11%. As a result of the optimization plan executed by 33, the bank was able to sell both properties to institutional buyers for approximately $14,000,000.
RIVER NORTH MIXED OFFICE & RETAIL MID-RISE BUILDING33 was recommended by a national hedge fund and appointed by a Judge in Cook County to act as Receiver on a 25,000 square foot, eight story mixed use office/retail building in the heart of Chicago’s River North neighborhood. The property was home to two restaurants, a penthouse lounge, six stories of office space and a day spa. From 33’s appointment as Receiver, the property experienced significant positive cash flow, which was driven by minimal vacancy, timely rent collections from every tenant, and lower-than-forecast operating expense load. As Receiver, 33 also supported a transaction for the ownership transfer of the penthouse unit to a new ownership group.
HYDE PARK RESIDENTIAL BUILDING33 was recommended by a local bank and appointed by a Judge in Cook County to act as Receiver on a six unit residential property in Hyde Park, located on the South Side of Chicago. The property was found in disrepair as a development plan to gut and renovate the 100 year-old building had been abandoned. As a result of due diligence procedures, the Receiver discovered that the property was scheduled to be in demolition court. 33 performed detailed financial and market analysis to understand how to proceed in the property’s best interests. 33 attended demolition court and provided testimony which ultimately preserved the building from being torn down. 33 also worked to establish a system to keep vandals away from the building and successfully preserved the value of the property during the Receivership tenure.
NORTH SIDE MIXED-USE BUILDING33 was appointed by a Judge in the Chancery Court of Cook County to be Receiver on a distressed mixed-use residential/commercial property in the Sauganash neighborhood, located on the North Side of Chicago. At the time of appointment, the building was operating in a cash deficit position and consisted of five residential units, a Montessori pre-school and a hair salon. The building was immediately secured by the Receiver, information was seamlessly obtained from the prior borrower and the Receiver achieved a 100% rental recovery in the building. Upon discharge, the Receiver distributed over $40,000 in excess cash flow to the new owner, which was generated during the receivership tenure.
33 provides both short and long term alternatives for distressed assets in all asset classes through its REO Management solutions. 33 understands the attention to detail required to manage institutionally-owned real estate and maintains a full team of property managers and maintenance professionals to ensure we can support a property in any situation. We often transition from the Receiver role into the REO Management role for our institutional clients who seek a seamless handoff of the property and value the attention to detail offered by our team.
SELECT CASE STUDIES
LARGE EXECUTIVE SUITE BUILDING IN NORTHBROOK
33 assumed management responsibilities for a highly distressed executive office suite building containing 48 office suites located in suburban Northbrook, Illinois. With very little documentation and no leases in place, 33 developed relationships with existing tenants and embarked on a comprehensive due diligence effort to determine occupancy and collect accurate tenant information. The 33 team ultimately stabilized the asset by negotiating new market leases with all current tenants, identifying existing vendor contracts and renegotiating terms, preparing the vacant suites for rent and launching a successful marketing campaign to list vacant spaces for lease.
SOUTH LOOP RESIDENTIAL HIGH RISE TOWER
33 was retained by a California-based hedge fund to manage 141 rental units in a 171 unit residential building located in Chicago’s South Loop neighborhood. As part of the management of the units, 33 was asked to oversee the conversion of the apartments to condos. 33 mobilized an entire team of on-site management, maintenance and construction personnel that were singularly dedicated to the day-to-day operations of the building and supported through 33’s Lincoln Park home offices.
As part of the conversion efforts, 33 became an integral part in organizing the redesign of the lobby and common space, as well as maintaining a clean, safe environment for existing residents. With the assistance of a new condo-management board, 33 also facilitated involvement from the homeowner’s association as the building transitioned from an apartment building to a condominium building.
ORLAND PARK STRIP CENTER
This assignment presented many challenges, including building code violations, occupancy permit issues and faulty construction. 33 navigated through various departments within the city and negotiated a settlement to remove the violations and obtain occupancy permits. 33 also obtained bids to complete the necessary construction and managed the construction process to completion.
SUBURBAN OFFICE BUILDING
33 was retained by a regional bank for this 26,000 square foot office building and worked diligently to operate the building at 92% occupancy. 33's progressive management plan, professional staff and meticulous accounting/reporting style appealed so much to the new buyers of the building that they retained 33's management services after they purchased the building.
Through our seasoned investment brokerage team, 33 offers best-in-class valuation and disposition services of institutional-owned and distressed real estate. We leverage our buyer network, which is comprised of a comprehensive and intimate network of real estate investors seeking specified returns in an array of asset classes. We also maintain strong relationships throughout the brokerage community and openly advertise compensation shares as we feel this philosophy yields the highest exposure and value for the assets we’re marketing.
Our full service brokerage team understands the complexity and nuances of selling distressed real estate and works with each client to develop a strategic exit plan for the property. We specialize in repositioning and maximizing the value of each asset to ensure it is sold for the highest possible price in the shortest amount of time.
33 has experience with transactions across several asset classes and has closed over $90 million in distressed real estate. A few examples of recent transactions include:
SELECT CASE STUDIES
RESIDENTIAL MULTI-FAMILY BUILDING IN CHICAGO’S WEST TOWN NEIGHBORHOOD
33 assumed management of a REO eight unit residential apartment building for a regional bank based in Chicago. 33 positioned the property for sale by leveraging its management experience to effectively communicate to buyers that deferred maintenance was minimal and by leveraging its leasing capabilities to retain quality tenants and boost income by replacing tenants with under-market leases. 33 identified a buyer from its investor network who completed a seamless purchase of the asset for well above the bank’s appraised value.
RESIDENTIAL MULTI-FAMILY BUILDINGS IN DUPAGE COUNTY
33 was appointed Receiver and Sale Officer in a highly contentious case involving 2 buildings totaling 39 units located in Villa Park, IL and Addison, IL. The buildings suffered from years of mismanagement, a multitude of City violations and significant deferred maintenance. 33 restored relationships with the Cities and addressed the safety and habitability issues at both buildings in a timely manner so that the buildings could be brought to market.
33 marketed the buildings to both its buyer network and a host of competing brokers, which helped create a bidding war for the assets. Through Court-approved bidding procedures, 33 was able to obtain 9 offers for the assets and drive the price beyond expectations.
COMMERCIAL PROPERTY IN INDUSTRIAL PARK IN LOMBARD, IL
33 was appointed Receiver and Sale Officer by the DuPage County Court for an industrial property in Lombard. The property was stabilized as part of the Receivership and relationships with the existing tenant were restored to establish a lease and generate cash flow for the building. In conjunction with bringing the property to market, the Sale Officer worked closely with the existing tenant to compel them to purchase the asset as they were the most suitable buyer. Acting as an intermediary between the foreclosing lender, the tenant and the court system, 33 was able to find financing for the tenant and sell the property out of Receivership for close to original asking price in less than 10 months. In doing so, 33 minimized the duration of Receivership and maximized value for the stakeholders.
BUCKTOWN SINGLE FAMILY HOME
33 was hired by a Colorado-based private equity group to create an exit strategy for a luxury single family home in Chicago’s Bucktown neighborhood that was obtained by the group through a foreclosure action. The group selected 33 over a host of competing brokers because through our integrated model, we were able to execute a semi-involved construction effort to get the property ready for sale. Through our valuation efforts, we were also able to demonstrate to the group the value appreciation that would be accomplished by our proposed rehabilitation plan. 33 secured an all cash buyer in under two weeks for 98% of asking price and recovered over 150% of the group’s incremental construction investment.