UrbanAmerica has launched a new workout firm targeting troubled and delinquent residential loans sat on bank balance sheets, with expectations it will expand the operation into the commercial sector.
The New York-based firm has partnered with West Valley, Utah-based real estate owned (REO) asset management company Green River Capital to create UrbanAmerica Res Services.
Richmond McCoy, UrbanAmerica chief executive officer, told PERE equity for the new company was provided by UrbanAmerica principals, adding that the venture would focus on states such as Florida, California, Nevada and parts of the North East US, where residential markets had been badly hit and where foreclosures were rising.
However, McCoy said the operation would have an eye to the commercial sector as well adding: “We do anticipate morphing into providing similar [workout] services for commercial real estate as well.”
He said the commercial sector would start seeing increasing numbers of bank – and government agency – loan workouts from the middle of next year as more financial institutions started to get to grips with their troubled, and potentially troubled, loans.
McCoy said UrbanAmerica had initially explored building a residential REO (when banks have taken back properties) and workout firm from scratch because the opportunity was “so compelling”, but the scale of the reporting and technical requirements prompted them to source a possible joint venture partner.
UrbanAmerica has typically targeted value-add opportunities, raising more than $500 million in equity through two funds, including the $400 million UrbanAmerica Fund II, which closed in 2006.