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May 20, 2016

A&M was engaged to understand the recovery value of the portfolio, which included finished and occupied buildings, as well as one asset with construction in progress.

Client Mandate
A multinational financial conglomerate entered into a joint venture (JV) with a developer to build primarily student housing.  When the developer began to experience financial difficulties, the JV partner wanted to understand the potential recovery value of the 11 asset (5,000-bed) portfolio in the event of a developer default. The client required this analysis as an input into its own strategy to resolve the portfolio – the options were foreclosure / sale of assets, recapitalization / buyout or loan modification. Simultaneously, the JV development partner pursued options to avoid bankruptcy.

A&M’s Approach
Our professionals were engaged to understand the recovery value of the portfolio, which included finished and occupied buildings, as well as one asset with construction in progress. 

Our efforts involved the following major activities:

  • Focus on operations, leasing activity and resulting financial performance of each asset to arrive at current value estimates
  • Evaluate fees and construction costs related to the wind down of an existing construction project
  • Solicit proposals from the top fee managers in student housing and conventional residential leasing; the project included advising the client on management changes and key points to consider before making a decision
  • Monitor pre-leasing activity at the student housing assets
  • Serve as a liaison between the conglomerate, developer and lender to re-negotiate debt terms and minimize the negative effects associated with partner’s bankruptcy filing

Results
A&M was able to successfully negotiate loan modifications and / or recapitalizations with the majority of the lenders, resulting in the avoidance of a bankruptcy filing and continuation of the partners as a going-concern.