From WSJ.com and The Real Deal-South Florida: Q & A with Frank Mackle
By Jennifer LeClaire
Venny Torre and Frank Mackle smell opportunity. In fact, they see the proverbial perfect storm in the real estate industry and are betting on a potentially profitable niche: distressed property workouts.
The real estate building veterans last November launched Miami-based Torre Mackle Group, a firm specializing in completing distressed real estate projects and Chinese drywall remediation.
The duo is on to something. South Florida ranks third among U.S. markets for the volume of commercial real estate and condo projects in some level of financial distress. The region has at least 232 known troubled assets, representing more than $6 billion in problematic loans, according to the latest report from Real Capital Analytics.
Torre Mackle's first project is Terzetto Villas, a 62-home development in Aventura. Construction of Terzetto Villas was halted last year when its developer, Merco Group, defaulted on its financial obligations. Now the property's receiver and Ocean Bank have hired Torre Mackle to resume construction in hopes of maximizing the unfinished asset's value.
The Real Deal caught up with Frank Mackle to discuss the complex issues of distressed real estate workouts, how banks determine whether it's worth it to complete a project, and the opportunities for firms like his over the next couple of years.
How much of the work on these types of deals are you able to salvage?
Many of these buildings don't have windows and doors installed, so you have some moisture issues. Sometimes you have to throw out the drywall because moisture had accumulated in the six to eight months of the building sitting stagnant. We've seen roofs that need to be replaced because the final layer wasn't applied and the sun started to damage the roof. Many assets are deteriorating because the properties are in some stage of foreclosure and there's no money to protect and preserve them.
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