Miami Joint Venture Targets Distressed Multifamily Assets

MIAMI-Despite reports heralding a shrinking inventory of distressed commercial real estate property, there is still plenty to clean up. Now, a new joint venture is entering the fray to acquire and turn around distressed multifamily properties across the country.

First Market Properties, a real estate investment firm specializing in distressed property, and Newport Property Ventures, a real estate management and construction firm with experience stabilizing and restoring troubled residential developments, have been working together for the past year. First Market acquired several garden apartment complex mortgages at deep discounts and Newport has been managing them. The companies are taking it to the next level.

“Our firms have similar objectives and take a similar approach to the multifamily marketplace, and our working experience with Newport instills confidence that this will be a highly beneficial alliance for both companies,” says Aaron Kurlansky, senior vice president of FMP. “This formalized relationship will enable FMP to expand its geographic sphere of operations more quickly, to take advantage of emerging opportunities.”

Plans are to acquire some properties for short-term stabilization while others will be held for longer periods. Each case will be determined by its own set of variables. Kurlansy is confident that the firms have a competitive edge in evaluating collateral, closing quickly and working to maximize the value of assets.

The company has completed two deals in Phoenix and one in Houston in the past few weeks. The typical strategy is to take possession by deed in lieu of foreclosure. The firm also buys mortgage  portfolios, as well as bank REO properties.

“The recession, combined with overleveraging, made an indelible mark on the multifamily industry, leaving countless quality, well-situated properties unable to service debt and keep up necessary maintenance, much less to make improvements to stay competitive,” says Stuart Zook, COO of Newport. “Such properties now represent promising opportunities for a joint venture like ours, which combines astute investment underwriting and proven restorative management skills.”