"I always love to find distressed properties, and they're outthere, whereby we can turn them into income-producing properties,"Kessner tells GlobeSt.com. "That's something we've been doing forthe past 25 years, and that's the best niche for us to get into,wherever it may be in the metro area."

East Harlem, Kessner recalls, was "a great area for us to getinto ahead of the crowd." His company, the R.E. Group, beganacquiring properties there in the early 1980s. In 1998, the companyarranged what was reportedly the first major Wall Street conduitfinancing in East Harlem, a 30-building package with NomuraSecurities. Nine years later, R.E. sold most of its Manhattanapartment and retail holdings, including 47 East Harlem properties,to London-based Dawnay Day for $225 million.

To get to that point, though, required years of confrontingchallenges not unlike those facing residential owner/developerstoday. The condominium market evaporated in thelate-1980s/early-1990s downturn, and the failing banks could notconvert short-term construction loans into longer-term debt. TheR.E. Group hunkered down, managing its rental portfolio andestablishing itself as a "white knight" willing to take overforeclosed properties.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.