Certainly there are available platforms for both asset categories in the market now. What is the new in this venture, according to the two companies, is that this will be the first major initiative in which both properties and note sales are auctioned on the same platform. We caught up with Jeff Frieden, CEO of REDC, to talk about why the company has opted for this particular strategy.

GlobeSt.com: I understand JLL's motivation for this initiative –it has an in-depth presence in the real estate capital markets. But REDC has largely focused on residential properties. Can you explain the jump, especially for note sales?

Frieden: We looked at the market trends and concluded that the opportunities will be huge for us in note sales during this downturn – even larger than the residential space during the downturn in the 90s. We reached out to JLL because they are a best in class partner that has in depth knowledge.

GlobeSt.com: For the note sale auction process in particular, what can you add to what is available in the market?

Frieden: Traditional loan sale have been a sealed bid type of experience. When we were talking to funds that buy these portfolios, we found they spend a lot of resources on due diligence to determine the true value. A platform like ours adds transparency to this process.

GlobeSt.com: Why do you think loan sales will be an important opportunity for your firm. So far, it hasn't delivered the returns many in the industry had expected by now.

Frieden: We think that is coming. Banks will take back a home in a minute – but if they have to take back a gas station, for example, they would rather trade the loan and stay out of the chain of ownership. Once they get the physical asset they have to deal with all of the ownership issues that accompany it.

GlobeSt.com: What else is different or unique about this offering?

Frieden: We are focusing on one-off or local sales. We want this to be more of a retail approach to get these assets to buyers in local markets. If you are a large bank with assets all over the country, and you have an empty or low performing strip mall in Modesto, CA – there is a high probability that you will find a buyer in the general Modesto area. Other auctions tend to focus on bundling all the notes together. We think the one-off approach or just bundling four or five loans will be much more successful.

GlobeSt.com: How much volume do you anticipate transacting on the platform?

Frieden: I couldn't tell you. Billions, eventually.

Instant Insights /

Real Estate Disposition's Jeff Frieden

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