Distressed Assets

Balfour at Stapleton – Aurora, CO
A Northstar property

Distressed Assets

Distressed Assets

Why distressed assets?

Northstar has strategically decided to enter the distressed asset space, in part, bracing for a potential recession in the coming years, as well as recognizing that even in up markets, some plans can go off track. While recessions have a bad connotation, they are a standard part of the economic cycle, and provide opportunity to savvy investors.

The current US economic expansion, which began in June 2009, became the longest in US history on July 1, 2019 and is continuing to grow. Admittedly, GDP growth has been much slower than all other post-war recoveries, potentially contributing to its longevity. Lender exposure to US CRE is at an all-time high both in absolute terms and as a percentage of US GDP $1.9 Trillion of CRE debt is maturing over the next 5 years. Non-traditional lenders have gone from effectively $0 CRE exposure in 2009 to over $50 Billion in 2018. The majority of the US CRE debt is held by Commercial banks who have constant regulatory and shareholder pressure to clean their balance sheets of nonperforming assets. These factors make it extremely likely that bank loan portfolio quality, which is extremely high today, will see significant deterioration over the next 24 months.

Northstar seeks out market inefficiencies by diligently studying areas on both a micro and macros level. Every investment is unique, and the difference between a performing and under-performing asset can boil down to seemingly innocuous variables which some operators or developers may miss in their due diligence. Our investment team has extensive experience in the commercial real estate industry, along with a deep understanding of the fundamentals in the CRE debt market. A core belief of ours is that basic fundamentals drive strong, risk-adjusted returns. We believe we have one of the strongest analytics team in commercial real estate, and by studying each asset, we’re able to find properties that fit our risk-reward profile. Our real estate debt team seeks consistency even in seemingly volatile markets through bottom-up analysis and risk control.

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Standard Distressed Loan Profiles

Standard Distressed Loan Profiles

 

  • Loan Size: $5-$50 million
  • Loan Terms: Up to 5 years
  • Property Types: Any except multifamily
  • Location: United States
  • Security: First mortgage
  • Loan Status: Performing or non-performing

Other Real Estate Owned (OREO)

Other Real Estate Owned (OREO)

Northstar focuses on three areas within Other Real Estate Owned (OREO) properties:

  1. Assets with the potential of significant capital appreciation, while supplementing returns with cash flow.;
  2. Assets that have endured prior mismanagement, or poor leasing/marketing strategies;
  3. Opportunities where the building is going through a major renovation

Example of Standard OREO terms:

  • Assets Size: Up to $25 million
  • Property Types: All Except Multifamily
  • Location: United States

In addition to OREO properties, Northstar will also consider Mezzanine Debt opportunities.

Mezzanine Debt Standard Terms

Mezzanine Debt Standard Terms

  • Loan Size: $5-$50 Million
  • Loan Term: Up to 5 years, or Senior Debt
  • Property Types: Data Centers, Assisted Care, Hospitality, Retail, Industrial
  • Location: United States
  • Security: Second Mortgage
  • Total Leverage: Up to 85% of total costs/stabilized value
  • Origination Fees: Up to 1% of loan amount upon funding + up to 1% upon repayment

To learn more about debt opportunities with Northstar, please contact distressedassets@northstarcp.com. 

WHAT OUR PARTNERS ARE SAYING

“I would like to recommend Northstar Commercial Partners. Having worked with several property management companies of all sizes, Northstar has been the most personable and easiest to work with in all aspects of communication and action. They are dependable and always available when needed. Response times to issues are immediate and there is a true sense of customer service and care.

Thank you Northstar for your partnership.”

Jason Hubbard

Office Manager, Boston Market

“CCIG has had a long term relationship with Northstar Commercial Partners Management for insuring their properties. Not only are they focus intensely on their insurance requirements, we also find them to be very client service focused, transparent communicators, knowledgeable, professional, caring and relationship focused. These traits display why the Northstar Commercial Partners Management team is one of the best management teams in the country.”

Scott Carlson

Cherry Creek Insurance Group

“We would like to thank Northstar Commercial Partners for the long and appreciated relationship over the years. It is vital in our industry to have clear, honest, and prompt communication; Northstar is always readily available and reliable. We respect and value our close partnership with Northstar Commercial Partners and look forward to continuing that partnership in the future. Thank you Northstar for all that you do.”

Jesus Guerrero

Vice President, Commercial Cleaning Systems

“As a tenant and small business owner in over 15 office building locations across the Denver Metro area, I have worked with numerous property management companies. NorthStar Commercial Partners are clearly leaders and innovators in their industry. I truly appreciate the commitment to their tenants, buildings, grounds and amenities. NorthStar Commercial Partners is proactive, reliable, knowledgeable and integrated into the community. Doing business with NorthStar Commercial Partners is being a part of something bigger.”

Phillip Booghier

Owner/Operater, Amenity Foodservice Concepts, Inc.

“Several months ago we took over ownership of a struggling franchise in Colorado Springs. As we looked at the business and project, it was clear that rent could be the largest hurdle for both financial and legal reasons. As we went into this project, we were warned by a friend that the landlord’s would be our biggest obstacle. This couldn’t be further from the truth. Nick has been responsive and professional throughout this process, but even more, he truly seems to care and try to make this project work for us. We have felt that he has always been working with us to help us succeed, and has been an exceptional representative for property management.”

Eric Liebold and Nate Banet

D1 Sports Training

“I am writing this letter of appreciation for the way that Northstar has served as a landlord for our church. When we moved to the building, we were looking to save money and be in a community where we could do the most good. We were not aware of the instability of the Master-Tenant that was working with the bank at the time. When they were evicted from non-payment among other things we wondered what was going to happen to us. Because it is so difficult to move an entire ministry at a moments notice, it was going to be very stressful and challenging. I talked to a representative from Northstar by the name of Nick who showed compassion and genuine concern for our situation. Northstar not only allowed us to continue to have our church here, they gave us an opportunity to manage the entire building. It is very inspiring to meet and work with an organization that cares about their tenants and really goes above and beyond to try and make them more successful. When I met with the officers from Northstar to discuss the opportunity, I was impressed with the transparency and genuineness of them. I am looking for a lasting relationship with Northstar, and I am hopeful that greater opportunities will develop. I thank God everyday for allowing our church to cross paths with such an outstanding organization.”

Pastor Richard Lewis

Senior Pastor, House of Hope Christian Ministries

“Martinson Services has been in business since 1986. In these 31 years, we have worked with countless numbers of companies and have recognized a few key traits associated with successful property management teams. Traits such as, honesty, integrity, hard work, accessibility , and attention to detail are baseline items that most property management teams exhibit to sell themselves and to stay in business. Northstar exemplifies all of these characteristics, but to us, this isn’t what makes them special. In our opinion, smart managers with GREAT communication are the ones that stand alone.

When problems arise, which is common in our line of work – snow storms, the intelligent and battle tested managers communicate concerns, listen, and are helpful with a solution to whatever the issue may be. While some managers use a phone or email to voice displeasure, the Northstar team excels at efficient and positive communication.

Several years ago now, my first interaction with Northstar Commercial Partners was an on-site property walk with Patricia Watson. It became immediately clear that this firm was different from the others. Brian and Patricia Watson were quite the team back then and I can tell you today that they still are. Their company has grown a great deal over the years, but you still see those core values reflected in all of their property managers and teams that have been built as a result of their growth.

This is what makes them great in my opinion.”

Chad Lunde

Vice President, Martinson Snow Removal

20%+

INVESTMENT RETURN

AVERAGE OVER 19 YEARS

20%+

INVESTMENT RETURN

AVERAGE OVER 19 YEARS