A California-based liquidation and auction house has created a New York-based division to service investors in distressed real estate, entering a competitive marketplace that may soon hold even more players.
Great American Group’s new arm, called Great American Group Real Estate, will offer a wide range of services, including appraisal, renegotiating leases, raising capital and providing expert testimony. The unit will also explore buying stakes in undervalued locations.
The company named Richard Hauer president of its new division. Hauer was head of the restructuring and bankruptcy group at Schonbraun McCann Group, a New York-based real estate consulting group that was acquired in March by FTI Consulting for $125 million. He previously co-founded Gemini Realty Advisors, a firm that consulted with clients that needed to sell distressed assets.
The firm expects to open new offices in Midtown Manhattan within the next two months, Hauer said. “We will be working with corporations — distressed or healthy — that need to come up with some solutions to maximize the value of their real estate or mitigate their liabilities,” he said.
Eastern Consolidated started such a group in 2005 and hired bankruptcy lawyer David Schechtman to head it. Schechtman said the idea is not new to New York — companies have done it here during past downturns in the ’80s and early ’90s — but the 2005 overhaul of the U.S. bankruptcy code makes it a tougher business to get into than before. At least two other national companies, Keen Consultants and Sheldon Good, have been brokering distressed asset sales in New York recently, according to Schechtman. He also believes other big names in the city’s commercial brokerage game will start following suit.
“Other big firms in the city with whom we compete claim they have expertise in distressed asset management,” Schechtman said. “But many of the guys with experience were doing this 15 or 20 years ago, and the code has been substantially revised since.”
Great American Group, based in Woodland Hills, Calif., has managed liquidation sales for major industrial firms and retailers, including Bombardier, Tower Records and Lord & Taylor.