Treeline Carves Out Troubled Assets Group

GARDEN CITY, NY—Having lent a hand to lenders facing distressed assets during both the 1990s down cycle and the current one, the Treeline Cos. is formalizing that practice area by carving out a new division. The locally based owner/manager, with an office portfolio of more than 2.5 million square feet, has launched Treeline Realty Advisors, a real estate consulting and asset management group focused on troubled assets. It will provide consulting services to develop and then execute management plans and disposition strategies for lenders and investors.

As a key player, Treeline’s principals have brought in Jason Wilensky, who brings an extensive background in commercial mortgages to the new division. “When I was at various institutions, I found in the last few years that a lot of the new participants in debt deals are not real estate owners and operators who have the expertise,” Wilensky tells GlobeSt.com. “These were people at hedge funds or money managers who got involved in real estate as the market started to peak. They’re just not equipped to deal with what’s going on today, especially when they’re faced with the decision of whether to take over assets where they were a debt holder and are now essentially an equity holder.”

He adds, “There are a lot of lenders out there with staying power that are reluctant to dump loans in this market on assets that they believe are strong performers in the long term but currently are not. These are situations where we can help lenders ride out the down cycle with our asset management expertise.”

C. Glenn Schor, general counsel and COO at Treeline, cites his company’s long experience in his area. “During the last downturn in the early ’90s, we did a lot of work with the local banks—handing asset management and managing on behalf of receivers,” he tells GlobeSt.com. “We find that banks generally don’t want to have a whole department in place to do this kind of work.

“We’ve been developers, operators and managers in all phases of commercial real estate, and we all have expertise in land development, subdivision and construction,” Schor continues. “So we have all these skill sets available to the institutions.” Some of Treeline’s principals, including Schor, have been in the business for more than 30 years; the company itself dates from 1985. Some of its

Schor offers some concrete examples of scenarios faced by lenders in which Treeline Realty Advisors could offer its services. “You have an office building with a single tenant; the tenant moves out, the bank has a large mortgage and they’re confronted with the problem of what to do with the asset—whether to multi-tenant it, dispose of it or sell the note,” he says. “That’s where we would come in, look over the building and help develop a game plan.”

In another scenario, “a residential building is 75% complete, the developer drops the keys off in the bank’s hands and they’re stuck with a three-quarters-built building,” Schor says. “They need to get through the job and get it to the point where it’s saleable without taking a horrendous beating. A third scenario is a residential building that was vacated, with a notion to convert it to condominium use. The developer can’t complete his grant and goes upside down.” Here, it’s a question of helping the bank “get to the point where they can put a product out to market,” he adds.

A fourth scenario which Schor describes involves “over-development of residential in a downtown area and no real exit strategy vis-a-vis rental, yet there is a local college looking for dormitory space.” Here, the process includes “working to bring about a conversion of a multifamily building that was built on speculation so that a portion of it is dormitory space, a portion of it is residential and a portion is converted to medical space for use by a local hospital; selling off pieces of it; getting an operator for it—pulling the bank out of the problem a piece at a time. Those are typical examples of things we would be able to bring value to, and they’re projects we’re actually working on.”

Alhough Treeline Realty Advisors is “a completely separate entity” from Treeline Cos., Schor says it will work in conjunction with the management company and draw on “a lot of the same skill sets and personnel to assist it.” Treeline Cos. founder and president Frances Schor serves in the same capacity for Treeline Realty Advisors, and other key executives of Treeline are part of the new division’s management team.

Kraig Silver, a veteran of both Treeline and CB Richard Ellis, is heading up the leasing efforts, Michael Schor will spearhead developing the lender’s strategy for the distressed property and Howard Schor heads up the construction department. Both companies represent two generations of Schors, including husband-and-wife Frances and Glenn and their sons Michael and Howard.

In a release, Howard Schor says, “It has always been part of Treeline’s DNA to seek out assets that presented opportunities,” hence the new troubled assets venture. Among Treeline Cos.’ most successful repositioning efforts in recent years was its renovation of a former A&S Department Stores warehouse at 180 Livingston St. in Brooklyn into 270,000 square feet of office space.