AMERICAS NEWS: History repeating itself

Today's real estate market has prompted many veterans to compare it to the savings and loans crisis of the 1980s. Times never change, they argue. Bubbles always burst.

For Mark Antoncic, whose Greenwich, Connecticut firm TriLyn manages a property debt and preferred equity fund, history is almost repeating itself. He has formed a joint venture with an ex-colleague to provide specialised asset management services to lenders and investors on troubled real estate assets.

Antoncic is teaming up with Chip Lauckhardt, chief executive of Tuckerman Group, with whom he worked at Eastdil Realty in the late 1980s.

The pair worked together on development finance, private equity placement and syndicated tax investment, as well as advising and acquiring distressed debt, including RTC assets. Eastdil became one of the largest separate account pension fund advisors in the US, as well as a big player in REIT formation and structuring.

Speaking to PERE, Antoncic said the new joint venture is expected to significantly expand assets under management at the combined companies from $6 billion.

“We believe this will be an important business over the next 12 to 24 months as the market deals with the deleveraging and devaluation which is underway. There are many investors today that do not necessarily possess the fundamental real estate capabilities to deal with various assets, but will nevertheless soon find themselves controlling them through foreclosures and, or taking control through B-piece investments, mezzanine and so on.”

He said on the traditional lending side, the JV could help by being an extension of the real estate and asset management team. “Our plan is simple: get these assets off life-support and out of the emergency room as quickly as possible through asset management and assist in executing exit strategies through capital events if and as appropriate.”

TriLyn continues to manage the $110 million TriLyn-Investcorp Mezzanine Partners I, a real estate debt investment fund with Investcorp and Bank of Scotland.

TriLyn says it is bringing high-yield credit structuring and work-out experience to the JV while Tuckerman is adding equity, development and redevelopment investment management experience. Tuckerman is partly owned by the bank State Street.

The formation of the JV comes as a Real Capital Analytics report suggests there are $106 billion of distressed and potentially troubled real estate assets in the US – with $4.5 billion of property already handed back to lenders.

RCA said $4.5 billion had already become real estate owned (REO) or reverted back to the lender, while another $21.2 billion of assets were in a “truly distressed” situation, where the mortgage was in default, the owner bankrupt or where the property had been foreclosed.