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Former banker takes smarts to auction firm.

After some resistance, lending institutions have jumped on the property auction property auction bandwagon, first with apartment units and now with commercial property. That's why Ken Brooks, a former banker for almost 20 years, has joined Carlton Property Auctions as senior vice president of the firm's new Institutional Sales Division.

Brooks, previously with First American Bank of New York after 17 years at Citicorp/Citibank, will help Carlton seek out institutions for the disposition of REO assets and performing and non-performing notes. He will also further the company's efforts to expand into the auction and bulk sale of commercial property and mortgages.

"I think at this point in the cycle, the disposition of properties via the auction probably makes sense, " he said.

Carlton President Steven W. Birbach said that many institutions are now realizing that the maintenance and marketing of a property eats away at the equity.

"Most banks have now made a decision to dispose of the assets, "said Birbach.

Carlton's previous auctions, which have yielded some $200 million, have primarily been for residential units and notes. Now, in a joint venture with Weichert Realty, Carlton is coordinating "The Greater Northeast Commercial Auction, which will offer $50-$75 million in commercial property and notes currently held by institutions. The property types include strip centers, hotels, office buildings and residential walk-ups with stores.

An auction, Brooks said, presents the seller with a number of advantages - an auction is conducted after a short marketing period, sellers get the true market value of the property that day and they "freeze" the competition for that day.

"The purchasers have to act immediately or they lose the opportunity," he said.

In addition, unlike a traditional sale, much of the due diligence has been done before hand.

The sale of discounted notes, Brooks said, is gaining in popularity as lenders try to avoid the tenuous foreclosure process. The purchaser then works out the loan or arranges a friendly or structured foreclosure with the developer and looks for an upside in the management.

"People are interested in buying mortgage notes and all the rights thereunder," said Brooks. "That's how liquidity is getting into the real estate industry."

In addition to auctions, Carlton will also do conventional and bulk sales, which according to Birbach, have an even shorter marketing window and are less expensive than other vehicles.

As vice president of First American Bank of New York, Brooks managed a $75 million middle-market portfolio consisting of REO assets, commercial real estate and personal loans for the bank's Asset Recovery Group. Among his rehabilitation/recovery strategies were bringing properties to auction and selling notes.

Brooks says he can speak with lending institutions from a position of knowledge and experience. "I've basically done what they've done," he said.

The former banker spent 17 years at Citicorp/Citibank. As vice president in the Real Estate Department, he managed a real estate loan portfolio valued in excess of $700 million. In that capacity, he structured the first construction loan to receive an A3 rating based on the strength of the deal from Moody's. The loan was made to The O'Connor Group to finance its Menlo Park Mall in Edison, New Jersey. He also negotiated a 10-year, $180 million commercial paper facility secured by 10 department stores, and restructured an $80 million loan secured by a distressed regional mall.

With a JD from Fordham University School of Law, Brooks says he can speak the language of not only the institutions that may sell property but also the attorneys that represent both institutions and cash-rich buyers.

"Some of the individuals I'm talking to are lawyers," he said.

Brooks is also a Certified Public Accountant with an MBA in finance from Columbia University.

As a banker and now an auction executive, Brooks said he has found that auctions are no longer taboo for institutions, both domestic and foreign.

"They're all amenable to the auction process," he said.
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Title Annotation:profile of Kenneth Brooks, Senior Vice President of Institutional Sales at Carlton Property Auction
Author:Fitzgerald, Therese
Publication:Real Estate Weekly
Article Type:Biography
Date:Sep 15, 1993
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