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LOS ANGELES-CB Richard Ellis has launched a new initiative called the Restructuring Services Group that brings together under one umbrella the full range of CBRE capabilities for servicing distressed commercial real estate. Spencer Levy, the senior managing director who leads the new initiative, tells GlobeSt.com that the Restructuring Services Group will “provide a single point of contact for our clients who are dealing with distressed commercial real estate.”

CBRE already provides all of the services required to service distressed real estate throughout an asset’s life cycle and has professionals throughout the company who are already working on such assets, Levy notes, but the new group “will bring them under one umbrella because we think that’s the best way to serve both national and regional accounts.” The new group has the capabilities to service both REO properties and loans that have not fallen into foreclosure. “In addition to skills regarding owned real estate, we also have a very large subsidiary that manages loans, and a large loan sales practice, so whether it is the whole loan or an REO asset, we have the resources to service the asset,” Levy points out.

Most of the clients of the new group initially will be large national and regional financial institutions, Levy says. He describes CBRE as well-qualified to service assets for these large national and regional firms because the Los Angeles-based company operates service platforms that rank as the largest or one of the largest in every facet of services required for addressing the problem of distressed assets.

Besides financial institutions, the new group’s clients will include other entities focused specifically on distressed assets, such as special servicers and bankruptcy specialist firms. Among the services CBRE offers that are required by owners of distressed assets are recapitalizations, distressed loan sales and workouts, asset and portfolio valuation, asset enhancements and repositioning, cost segregation for increased after-tax cash flow, surplus space disposition and portfolio optimization.

One reason for forming the Restructuring Services Group now is that distressed assets are “such a complex and moving target,” Levy says. He explains that the problems began in the single-family home market then gradually made themselves felt in land deals and projects under development.

The distress will eventually creep into other asset classes, but Levy says, “We don’t expect material distress in core real estate for some time.” He explains that, although fundamentals are deteriorating, they are beginning from a relatively strong point, and the default rate in CMBS loans still remains at only half of a percentage point.

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