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SAN FRANCISCO-Amid an increasing pool of distressed assets a young Southern California-based commercial real estate workout and advisory firm is expanding operations. Third Wave Partners recently opened an office in the Bay Area and tapped former HSH Nordbank regional executive David Messing to develop its business platforms in Northern California and the Western US.

Third Wave focuses on acquiring “below-the-radar” and “off-market” opportunities, distressed or undervalued, by forming joint ventures with borrowers and owners, and providing workout advisory services to borrowers, owners, investors, and lenders. While loan and REO assets have been hard to come by due to lenders’ not wanting to take a loss in order to meet the market, company executives tell GlobeSt.com that they are working on several apartment acquisitions from long-time owners who are more willing to meet rising cap rates because they are still making money.

Messing comes to the firm from HSH Nordbank, a commercial bank based in Northern Europe for whom he launched operations in San Francisco in 2005. During his tenure at HSH Nordbank Messing was responsible for originating, structuring and managing more than $1 billion of commercial real estate loans in the Western US. Messing left the company in September 2008 and its office at 560 Mission St. reportedly went later that year. A company spokesperson did not return a phone call seeking comment and Messing declined to gossip about his former employer.

With regard to his new post, Messing tells GlobeSt.com there is a lot of activity but not a lot of closings in the distressed asset category as yet. “We have bid on several loan and REO assets, which we are tracking actively,” Messing says. “Our efforts to buy have been stymied by a host of factors–borrowers trying to retain control any way they can, lenders concerned about write-downs as it relates to earnings or auditors, disagreements over valuation, etc.,” he says. “As such, there is a lot of looking but not a lot of executions, however; we expect there to be more [lenders willing to meet the market] later this year.”

Christopher Grey, who co-founded Third Wave in August 2008 with Mark Abramson, tells GlobeSt.com that while it hasn’t found any commercial property investments that can be had at prices he thinks make sense–due to a combination of unrealistic sellers and expensive financing–it has found several potential apartment property acquisitions.

“We believe they are undervalued relative to current market conditions and that financing through Fannie and Freddie is very attractive,” he says. “There are some sellers on the apartment side who’ve owned properties a long time and simply have to sell for estate reasons, partnership reasons or liquidity needs, and they are not concerned about the lower valuation because they’ve owned it so long they aren’t selling at a loss.”

Both Grey and Abramson previously did stints with affiliates of Highridge Partners, a Los Angeles-based real estate investment company that has acquired or financed over $6 billion in real estate projects. Immediately prior to Third Wave, Grey was managing director of the California office of Emigrant Realty Finance LLC, the real estate group of New York-based Emigrant Bank. Prior to that, he was a managing director and co-founder of Crestridge Investments, an affiliate of Highridge Partners. Prior employers include Douglas Emmett Realty Advisors, JMB Realty and Heitman Financial.

Abramson, a practicing real estate and finance attorney, was general counsel for Highridge Partners immediately prior to founding Third Wave. Abramson also served as COO of Haverford Capital, a mezzanine and structured finance affiliate of Highridge Partners, and was part of the Benequity Properties management team that restructured the NYSE-listed commercial real estate company. Serving first as General Counsel and then as Vice President and President, Abramson was responsible for supervising all corporate and legal affairs and assisted in the privatization and management transition following a hostile acquisition and the subsequent downsizing, asset sales and repayment/workout of $180 million in corporate and asset-based debt.

Grey and Abramson are based in El Segundo. Messing will operate out of the company’s office in San Ramon with Patrick Brandin, formerly with Webcor Builders, where he managed such projects as Millennium Tower, a $350-million, 60-story condo tower at 301 Mission St. Prior to that he worked for Swinerton Builders, managing client relationships and delivering such projects as 211 Main and 215 Fremont for the Charles Schwab Company as well as data centers for MCI WorldCom and other commercial and industrial clients.

Prior to HSH, Messing was director and western regional lending manager for Paris-based Caylon, an international investment bank, and before that was a director at locally-based Tishman Speyer. Messing started his career originating commercial real estate loans for Nomura Asset Capital Corp. and Credit Lyonnais.

Messing says he took the job because he believes Third Wave’s strategy and team appear to have the right mix of talent to succeed in a transitional economy such as this. “There is a need in this market for someone who can provide comprehensive restructuring solutions to borrowers, owners and lenders, as well as sound, conservative underwriting and creative structuring on the investment side,” he says. “Third Wave’s principals have that expertise.”

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