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DISTRESSED IS THE NEW BLACK

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DISTRESSED IS THE NEW BLACK
DISTRESSED IS THE NEW BLACK
The word du jour these days seems to be "distressed." Investors have become giddy about taking advantage of such opportunities since the credit crunch hit, Real Capital Analytics research guru Dan Fasulo told us when we visited his Fifth Avenue office. Funds began asking RCA about these assets, so its analyst team started flagging properties globally last fall for a new product offering. It discovered that distress is not only on the property level, but on the ownership level, so it split the assets into two buckets: troubled, when the owner or building has defaulted or is in danger; and potentially troubled, when the owner has immediate refi debt and may not meet obligations or a building may lose a major tenant. The asset is de-flagged if the owner gets out of the mess.
DISTRESSED IS THE NEW BLACK
Dan with analysts (clockwise) Morris Cox, Doug Murphy, Ben Thypin, Natalie Hall, and Jessica Ruderman. In New York, overly aggressiv e owners from '07 find themselves with loans they can't finance, he tells us. The city has $3.5B worth of distressed assets, but the percentage of assets compared to the overall market is fewer than bust markets like Las Vegas and Phoenix. Most are office, notably Macklowe's former Bertelsmann Building and Worldwide Plaza. Development sites on the hit list include 303 East 51st, where the crane collapsed; Five Franklin Place in TriBeCa; and the Drake Hotel site at 56th and Park. Over 200 more assets and sites are on the watch list, which RCA will monitor continually in'09.