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NEW YORK CITY-Real estate development and advisory firm Acre Properties and WSP Group, a multi-national engineering firm, have formed a new affiliation called ACRE+WSP Advisors. Based in Manhattan, the new venture specializes in revitalizing troubled assets for owners, lenders, developers and institutional investors. Steven Rosefsky and Erik Horvat of Acre Properties and Jeff Smilow and David Cooper at WSP Group will direct the firm.

Acre Properties principal Steven Rosefsky tells GlobeSt.com the new firm has the ability to be a one-stop provider of “a whole universe of advisory services that’s very unique to the general marketplace. The firm extends the offer, no matter what the client’s real estate collateral is, be it residential, a partially completed project, a busted hotel project, or a piece of vacant land.”

Rosefsky says current market assumptions have shifted and that a number of recent land and construction deals in permanent and refinanced debt facilities were underwritten with a very different economic construct in mind. Add to that, uncertainty about lending standards in the CMBS market.

By this past September, the total value of properties in Distress had risen to $138.2 billion nationwide according to data from Real Estate Analytics. An October 22 RCA report says the $29 billion of commercial property falling subject to default, foreclosure or bankruptcy in Q3 is above levels in Q1 or prior and continues to dwarf the volume of properties sold.

To help decipher the challenges facing some of those properties, ACRE+WSP Advisors will offer development, financial, legal, construction and engineering services under one umbrella. Rosefsky says the firm will help bring new perspective to lenders and owners of many of those problematic properties.

“Forming a joint venture with an engineering firm with the scope and scale of WSP’s business, gives us the ability to look at our clients’ investments, not just through the aspect of what financial re-engineering needs to be considered, but also the nuts and bolts of the engineering side, as well as the asset management side,” he says.

Ultimately, Rosefky says the combined service platform provides a second chance at viability and subsequent profitability at challenged or problematic projects.

He says the questions coming from the firm’s clients, primarily commercial or private equity lenders, include, “what do I have and how do I maintain the value and stabilize that value.” Further, if the client so chooses, “how do I manage or dispose of the real estate I own?”

Currently, he says there are a number of things banks are doing to work through some of those questions, including note sales, foreclosures where they sue guarantors after the foreclosure, sitting on an asset and waiting for better times, or completing construction on busted projects.

But, Rosefsky says lenders are not developers, and, with the exception of those who are more well versed, “they don’t necessarily want to be in the game of going in and hiring contractors to complete a construction project.”

Rosefsky says the new firm can offer solutions to newly emerging challenges posed by the current market. For example, the firm is currently working on a partially constructed hotel project in what he calls “a very toney part of Manhattan.”

Only the core shell of the structure is complete. The lender is asking what to do with the asset. “We’re helping the client evaluate an alternative use that has significant construction, engineering and zoning risks.”

“It’s just too simple to say, we’re going to convert it to residential without having any understanding of the costs and delays associated with that desired result,” says Rosesky.

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