CB, Grubb Shift Sights to Distressed Assets
CB Richard Ellis and Grubb & Ellis have joined the ranks of big brokerages making organizational changes to chase after an expected flood of work dealing with distressed assets.
Both firms are forming teams to advise banks, insurance companies, government agencies and other clients that need help appraising, managing, selling or refinancing distressed properties and loans. The changes at CB and Grubb follow similar moves at Jones Lang LaSalle and Cushman & Wakefield.
The national brokerages are staffing the new distressed-asset teams by reassigning existing executives. Little if any new hiring is expected, at least initially.
Most of the major investment-sales brokerages have been mulling restructurings for months. The announcement by Jones Lang two weeks ago presaged a rush by firms to highlight their advisory services for distressed assets.
"If you can't offer these services to people, your clients are going to go somewhere else," said an executive at a top brokerage.
CB has set up a "restructuring services" group, headed by Spencer Levy, senior managing director of capital markets. Levy will provide a single point of contact for a three-pronged approach to distressed assets: underwriting, asset management and disposition. The group will have the ability to manage and sell both distressed properties and loans. An early assignment for the group is selling some of the foreclosed land and residential assets of the failed IndyMac Federal Bank.
Levy said the group will start modestly and be flexible. Instead of creating an enormous new bureaucracy, Los Angeles-based CB is dividing its efforts into the broad three groups and will beef up niche services - such as assisting state and local government agencies - if demand arises. "We don't want to make it too broad, too soon," says Levy. "We want to keep it simple."
CB will initially focus on pitching advisory services to banks and insurance companies - the institutions already wading through foreclosed properties and nonperforming loans. In the coming months, CB's already-huge asset management groups are likely to swell even more, said Levy. The firm currently manages 2 billion square feet of properties worldwide and expects the coming wave of foreclosures and corporate bankruptcies to mean more assignments from institutions that need help managing assets.
Grubb, based in Santa Ana, Calif., has set up a "special asset resource" group to spearhead its push. The group is divided into nine specialties: asset management, transactions, research, valuations, construction management, property management and receivership, lease administration, asset management, capital markets and a unit to provide market data.
The group is headed on the West Coast by Conrad Andersen, senior vice president of corporate services, who is based in Santa Ana, Calif., and on the East Coast by Frank Mancini, executive managing director, based in New York. They have already begun soliciting assignments from banks and government agencies.
Glen Esnard, who took over Grubb's capital markets group four months ago, began working on the reorganization almost immediately. Under the new program, clients can access some or all of the services. Bundled advisory work offers a discount.
Esnard said he is under no illusion the distressed-asset team will fully replace revenue lost in the investment-sales slowdown, but added that the move should help build relationships. "The juice in this business is always going to be in transactions," he said. Helping clients deal with distressed assets could reinforce existing relationships and create a new client base, Esnard added. "We feel this will help us earn the right to do their disposition work."
Jones Lang kicked off the shift in emphasis by major brokerages early this month. The Chicago firm set up five teams that will help banks, insurers, government agencies and private groups sort through distressed properties, loans and securities.
Cushman followed soon after by establishing a "resolution group" that will also offer a menu of advisory services. Headed by Frank Liantonio, executive vice president of capital markets, the group will be able to assemble teams of specialists from throughout the company, including its debt and equity placement arm, Sonnenblick Goldman, to advise clients on property management, valuation, financial analysis, refinancings and recapitalizations.