Distressed Assets Investor- December 2011

Distressed Assets

DECEMBER 2011

INVESTOR

Providing Field-Level Guidance on the Acquisition and Disposition of Distressed Assets

An Interactive Digital Newsletter
Published by GlobeSt.com
& Real Estate Forum

Private Equity’s Sideways Entrance

As more private equity players align themselves with special
servicers, the industry can expect to see more deals and a
more regimented approach to pricing

Whether distress commercial real estate
investors realize it or not, the various
companies that C-III Capital Partners
LLC is acquiring represents a milestone
for this part of the industry. It is easy to
see why the message—that is, growth
in distressed asset
transactions is
coming—might be
lost. After all, New York City-based C-
III is intent on building out a diversified,
full service real estate company.

However, the bottom line for distressed asset investors is indeed that C-III and other private equity-backed funds are acquiring special servicers and their assets and bringing complementary business lines to the table while they’re at it. They reason they’re moving into this space is because they see the business, and the fees they can generate from it, as finally poised for growth.

Not that the industry is moving wholesale in this direction. Some companies are charging ahead full force toward this model, while others are approaching it from different angles. C-III,

BY ERIKA MORPHY

for the moment, appears to be the most aggressive of all these firms.

The company launched itself into the commercial real estate world with the March 2010 purchase of the institutional debt-fund management and loan servicing businesses of Centerline Capital Group, also based in New York. City Since then, C-III has moved into the mortgage origination, investment sales and title insurance arenas—and special loan servicing, when the company acquired the special servicing and CDO management businesses of JER Partners this past August. In a statement issued at the time of the acquisition, C-III noted that McLean, VA-based JER was the named special servicer for $35.5 billion of commercial property debt, of which about $4 billion was under active management.

Other investments of note: In June 2011, C-III announced it would acquire Princeton, NJ-based NAI Global, which runs what is reportedly the largest network of independent commercial