Relevant Experience: Management of Distressed Properties
Newmark Knight Frank has considerable in-house experience with managing distressed commercial real estate and REO for clients such as Aetna, Principal and Mass Mutual, and working with local court systems and managing properties in “receivership.” The following case study details the action steps taken by Newmark Knight Frank to manage a portfolio of distressed properties for Aetna.
Aetna Management and Marketing of Distressed Properties
For Aetna, Newmark Knight Frank managed a five-building portfolio of approximately 350,000 square feet. Working closely with the client, our team of real estate professionals was charged with stabilizing the asset and repositioning it for sale.
Our process began with an introduction to all existing tenants to explain our role and intent. A complete physical assessment was performed to ensure the integrity of the building infrastructure and operating systems. Repairs and maintenance and capital improvement projects were identified and recommended to ownership for approval. All leases were reviewed and abstracted to validate rents and additional charges. Accounts receivable and accounts payable were validated and cleared. Service contracts were re-bid. New operating budgets were prepared and entered into our accounting system. Newmark Knight Frank accountants directed monthly rent billing and collection. Financial and operational reports were generated and submitted to ownership monthly. In addition, we met with the client monthly to review asset operation and operational performance.
Some of these properties experienced high vacancy rates. Our leasing team met with all tenants in an effort to understand their short- and long-term space needs. In some cases, tenants with significant area ranges were terminated with captured space included in the master restacking/repositioning plan. The leasing team was also responsible for developing a marketing plan including on-site events attended by local brokerage firm representatives.
Newmark Knight Frank was able to both effectively manage the properties and successfully reposition them for sale.