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NEW YORK CITY-Benchmark Real Estate Partners, a boutique development firm launched by commercial veterans Scott Aaron and Scott Heller, aims to make lemonade out of the lemons that are “busted hotel and condominium projects,” as Aaron puts it. The new company’s primary focus is to pursue development opportunities in residential rental and hospitality projects, and also to provide alternate exit strategies and workouts for lenders, private equity funds and owners of distressed assets.

“We fill the void,” Aaron tells GlobeSt.com. “We’re developers and operators, and we have no failed projects of our own to deal with, so this is an opportunity for someone with a clean plate to work with the developers or equity firms to extricate themselves from these bad situations.”

Aaron says there are opportunities for Benchmark “on two fronts. Construction pricing has come down significantly, so landowners with very low bases are now able to affordably build rental housing, whereas for the past few years construction pricing was so high that it’s been cost-prohibitive. At certain points they were looking to sell the land for incredibly high prices–and that option of course is not available to them any longer–or build condo units or hotels. Luckily for the guys we’re working with, they didn’t start construction. So they’re still sitting with land, and they’ve retained us to go ahead and look at constructing rental housing.”

From its peak earlier in the decade, “Construction pricing has come down at least 30%, if not more,” Aaron says. “The owners’ land basis hasn’t changed, but now the construction costs have come down to the point where even with lower pro forma rental prices than you’re seeing today, we’re able to make the numbers work.”

Along the other avenue Benchmark is pursuing, “we’ve been talking with private equity funds and lenders who have projects that are either half finished; completed, but empty; or hotels that have been renovated in anticipation of $400 to $500-per night room rates that are no longer there,” says Aaron. “These projects are either on the verge of being taken back by the lenders or already have been taken back. We’ve seen a lot of situations where developers had over-extended themselves and really need another developer to come in and finish the project, either by infusing it with more cash or taking something that has already been completed and repositioning the asset.” Another result, he says, is “getting the lender on a path to where there’s an actual exit strategy rather than just sitting with empty product.”

Benchmark has devised four deal structures: as owner/developer, where the company will purchase properties or provide capital to new or existing development projects; joint ventures with existing landowners who may lack the expertise to extract full value from their land through development; workouts with lenders and owners of real estate and debt; and developing a new project or re-positioning one for owners who have the required equity and want to retain ownership.

Aaron and Heller, who have more than 30 years’ experience between them, first teamed up while at the Brauser Group in 2006 to build and market 100 W. 18th St., a Chelsea luxury condo launch which drew widespread media attention in 2008. Aaron’s background is in development, while Heller is an acquisitions and assemblage specialist. Their partners in Benchmark include Michael Ritz, with a background in real estate finance and project management from his years at Bear Stearns, the Carlton Group and Tarragon Development; and Mathew Pargament, who is considered one of the country’s top hotel operators and hospitality turnaround specialists, according to a release

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