ANN ARBOR, MICH. – Ann Arbor-based McKinley’s Residential Client Services team recently was appointed receiver for a 14-asset, 3,709-unit multifamily portfolio spanning six states, which not only reflects the company’s track record as but also represents McKinley’s first expansion into the Texas market. A breakdown of units by city is listed below:
This appointment represents the 107th court appointment of McKinley to workout distressed real estate since the beginning of the financial crisis. As part of the assignment, McKinley has been appointed Receiver by US District Court for the Southern District of Texas.
“We have extensive experience in receivership and workouts, and we’re very well known in distressed real estate circles for our ability to fix problems,” says Ken Polsinelli, chief real estate officer for McKinley. “Before the most recent recession, we staffed up because we saw it coming, and we went from 5 or 6,000 units to 15 or 20,000 quickly.”
This appointment is also is one of the five largest multifamily assignments in the CMBS market in 2011. To put that in context, Polsinelli says there are hundreds of busted real estate loans and billions of dollars of distressed assets, particularly in CMBS.
“For all the negative publicity Freddie Mac and Fannie Mae receive, less than one half of 1 percent are defaulted,” he adds. “The current CMBS default rate is approaching 17 percent. In a trillion dollar business, that’s dramatic.”
In addition to having the track record of adding value to properties in receivership, McKinley is able to stabilize properties quickly, which is in part why it was assigned this particular portfolio. While the assets in areas that have been hit harder may take a little longer, the Texas markets specifically are not as stressed and will be able to be turned around expediently.
“It’s especially important in multifamily to address issues immediately; oftentimes people forget about the living conditions,” says Polsinelli. “In our case, we use rents that are in place, loan payments are suspended, and we use that money judiciously and invest that into the property. But regardless, we have to get best value for best recovery price.”
— Dan Marcec