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DiSTRESSED REAL EStATE
distressed real estate in chicago
33’s Distressed Real Estate Services practice performs receivership, REO Management and Note & REO brokerage services for banks and other financial institutions. Unlike traditional real estate firms, we boast a team of former workout professionals, corporate finance consultants, engineers and attorneys. Our approach to distressed assets is consultative in nature and we can deal with simple property takeovers to contentious borrower disputes. We’ve served as Receiver on over 130 cases, managed hundreds of commercial and residential REO properties and completed in excess of $150M in distressed note and property sales.Â
The team with experience
We’ve tailored our practice to meet the needs of an array of clients which include debt servicers, private equity funds, hedge funds and regional / national banks. Our integrated business model offers our clients a single point of contact throughout the entire process. This structure significantly reduces timelines to stabilization and minimizes costs for our clients
Our areas of expertise:
sector
Residential (Condo)
service
Distressed Assets
location
Chicago
Featured case studies
Distressed Chicago High-Rise
In 2013, 33 was approached by a West Coast-based hedge fund, Sabal, to take over this distressed luxury high rise in Chicago’s South Loop. The property was acquired by Sabal through a loan portfolio acquisition and was one of the many properties in the portfolio that Sabal had 33 operate.
171
Units
$47M
Combined Asset Value
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sector
Multifamily / Office
service
Distressed Assets
location
Chicago & Northwest Suburbs
Featured case studies
Ponzi Scheme Portfolio Takeover
In September of 2019, 33 was appointed by N. Neville Reid of Fox, Swibel in the SEC’s case alleging a Ponzi scheme against Northridge Holdings, Ltd, owner of a large residential and office portfolio across Chicago and the surrounding suburbs, to assume management, leasing, preservation and brokerage responsibilities for the portfolio.
848
Units
$75M
Combined Asset Value
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sector
Commercial
service
Distressed Assets
location
Chicago & Illinois Suburbs
Featured case studies
Scattered Site REO Portfolio
In 2014, 33 was hired by the Bank of Hope, a West Coast bank to manage their entire portfolio of REO properties in the Chicagoland area. The properties were a mix of retail, office and warehouse and were inherited by the Bank of Hope when they acquired a variety of small local banks. 33 continues to manage the portfolio in 2021.
30
Properties Total
$15M
Combined Asset Value
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sector
Multifamily
service
Distressed Assets
location
Western Illinois Suburbs
Featured case studies
Suburban Multifamily Bankruptcy
In September of 2020, 33 was approached to take the stalking horse position in this diversified workforce housing bankruptcy sale. The “Windy City Portfolio” was ultimately sold to a higher bidder, but 33’s involvement as the stalking horse was designed to demonstrate to the market that reliable operators were assigning significant value to the properties.
528
Units
$42M
Combined Asset Value
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FAQ
How do I acquire a note or participate in a note sale?Â
In real estate scenarios, notes reflect the contract entered between a lending institution and a borrower to finance a property. In other words, a note is a loan.  Acquiring notes typically requires personal relationships with lenders (banks, special servicers, other lending institutions). These lenders want to know that prospective buyers can close fast and have ample capital (cash) to complete a purchase.  Notes contain highly sensitive information about borrowers and are not made publicly available.  Investors of notes typically have one of two goals: (1) find a way to acquire the underlying real estate secured by the note by way of foreclosure or (2) charge contractual high interest rates (“default interest”) to the borrowers to earn a return.  Note purchasing can be very lucrative but requires an intimate understanding of the collateral securing the note.
What is Receivership?
Receivership is the appointment of a real estate professional to protect and preserve properties when a dispute exists between a bank and a borrower. Â When a bank begins a foreclosure action against a borrower, they will approach the court to have a Receiver appointed to protect their property while the foreclosure case proceeds. Â Receivers immediately take control of the property and assume the responsibility of collecting rent (when occupied), handling all repair and maintenance needs, and reporting to the court either monthly or quarterly as to the status of the property. Â Receivers are typically discharged when the bank concludes its foreclosure suit and is awarded possession of the property
Is Receivership only necessary when there is a dispute between a lender and a borrower?
Receivership can be used in an array of scenarios when there is a need to protect a property during a dispute between two or more parties, or when the property presents a risk to the general public. Â Oftentimes, estate and divorce attorneys will request the court appoint a receiver when familial disputes arise. Â In other cases, municipalities will request the Court appoint a Receiver when a property presents a risk to the general public and needs to be made safe. Â Fees for Receivership are typically paid through income generated by the properties, but when no income exists the owner of the property will ultimately have to fund the Receivership fees.
How is a foreclosure conducted?
When a borrower can no longer pay for his/her mortgage and is unable to reach a modification to their loan terms, the bank will approach the Court and initiate a foreclosure proceeding. Â The bank has to present documentation evidencing that the borrower has been and remains delinquent in its payments and oftentimes prove to the court that they attempted to work with the borrower to resolve the default. Â Foreclosures must go through the court system in which the property is located. Â Typically at the end of foreclosure, there is an auction for the property. Â If there are not any prospective buyers that offer to pay more for the property than is currently owed to the bank, the bank will take back the property through a credit bid. Â A credit bid is simply the bank using its outstanding mortgage as its purchase price at the auction.
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