Developer partners with engineering firm, WSP.
The new firm, called ACRE+WSP Advisors, bundles the pair's services into a venture aimed at providing consultation to lenders and real estate developers grappling with stalled construction projects.
Despite a deterioration in real estate values that, according to widespread estimates among real estate experts, has left many properties with outsized levels of debt, there have been relatively few foreclosures in the city.
New real estate development has been one area however where banks and other lenders have been unable to postpone having to deal with their problems.
Numerous projects around the city, mostly residential condominiums, have stalled for lack of funds or because the diminished economic prospects of the development amid the recession have convinced lenders to cut off financing.
While some experts and real estate investors anticipate that bargain real estate deals will materialize at some point during the downturn, fallow construction sites have been among the few assets to trade at sharp discounts so far.
One of the reasons is because lenders have been reluctant to foreclose and try to salvage more value by completing the projects themselves for lack of expertise in development. Instead, some have begun to move to cash out their positions through mortgage sales at bargain rates. These deals usually change hands at distressed prices because they are difficult to salvage.
ACRE+WSP Advisors appears to cater to lenders hoping to avoid this outcome, offering construction oversight and development services that may help banks and other financiers finish projects.
Erik Horvat, a principal at Acre said in a statement that the new company would help lenders make strategic decisions "including whether to foreclose, sell positions, or infuse projects with new capital."
The company says it can help arrange capital injections for cash strapped projects that will help lenders avoid having to risk pouring more money into troubled deals. Such cash arrangements can also be made to provide developers with the means to finish their development or physically modify the project in order to improve its viability.
Steven Rosefsky, a principal at Acre said in a statement released by the company that the partnership brought together "development, financial, legal, construction and engineering professionals that bring new perspective to problematic projects for owners and lenders"
"We'll give challenged projects a second chance at viability," he said.
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|Publication:||Real Estate Weekly|
|Date:||Nov 11, 2009|
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