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Twelve years ago, commercial real estate brokerage firm LandQwest Commercial formed a division to handle court-mandated receiverships of properties in response to a growing number of foreclosures.
The move turned out to be prescient, as the economic recession that followed grew into the longest and deepest since the Great Depression of the 1930s. For its part, Southwest Florida became among the national epicenters of the crisis.
The market’s upswing beginning in 2012 largely eliminated the need for the division.
But with the economic growth cycle edging up to its 10th year and dark financial clouds swirling from the COVID-19 pandemic, the Fort Myers-based brokerage and property management is resurrecting its Asset Recovery team — in case foreclosures or other court actions once again ramp up.
“Bankers are telling me that in the first quarter of 2021 the COVID-19 upheaval will be at its apex, and they will have to start foreclosure proceedings — in some cases even if loans are current,” says Clifford “Chip” Olson, a court-appointed receiver who has worked in the business for three decades and teamed with LandQwest to revive the division.
“Because banking regulations have changed over the past decade, many landlords will either have to put more money up or face foreclosure, the result of values dropping from the pandemic,” Olson adds.
Although many apartment tenants have continued to pay monthly rents, retail operators have been able to negotiate with their landlords to stay open, hotels have sought and received forbearance on mortgage debt and office occupiers have continued cutting checks for empty offices throughout the pandemic — staving off foreclosures for now — many experts contend such payments will ultimately cease as the effects of the virus continue and aid from the federal government diminishes.
If that occurs and lenders are forced to turn to the courts for relief, receivers are likely to be in high demand to manage properties, nullify problems and stabilize assets.
Rokki Rogan, a LandQwest founder and principal, says combining Olson’s expertise and LandQwest’s depth will put the Asset Recovery team in good stead.
In all, LandQwest maintains four offices, in Fort Myers, Naples, Tampa and Orlando, manages more than 2.5 million square feet of commercial real estate, has dozens of brokers on board and generates in excess of $5 million in revenue annually.
“We have the ability to come in as a neutral party,” Rogan says. “But to be a receiver you have to possess special attributes and a skill set. And it’s more than just about real estate, it’s having established relationships, understanding financing, management and dispositions.”
Olson notes that many distressed assets require “forensic” accounting, a specialized skill, and receivers have to be bonded.
“Becoming experienced in asset stabilization, debt liquidation, forensic accounting, real estate management and dispositions doesn’t happen overnight,” he says.
Although many law firms have attorneys on staff who specialize in handling receiverships, Olson and Rogan say many lack the necessary real estate management or finance experience. That, in turn, can lead to mistakes or lost value when selling distressed properties.
“Together we have the ability to unwind these properties and put them back together,” Olson says, noting he’s managed roughly $850 million worth of commercial real estate throughout his career.
“Our joint experience gives us the credibility with the courts to say what needs to be done. And while it’s true that there are people out there who can do this work, there aren’t many who have the depth and the expertise that’s necessary. Ultimately, you have to be appointed and you have to answer to the courts.”
More than a decade ago, LandQwest worked for court systems on behalf of Northern Trust Bank, Fifth Third Bank, Key Bank, Encore and others as they dealt with non-performing loans and assets whose values had sunk.
“In a lot of these cases, unfortunately, there’s often deferred maintenance that needs to be addressed or taxes that may not have been paid,” Olson says. “I’ve had more than a few instances where a building owner will just disappear.”
Rogan says that while he hopes the dire predictions don’t come to pass, he expects several Southwest Florida retail sites, office buildings and hotels to be vulnerable in the coming months.
LandQwest’s Asset Recovery team has the infrastructure in place to handle roughly 15 different assignments simultaneously, Rogan says. Although most court-appointed receiverships end within a year, Olson says he had one assignment that dragged on for eight years.
“Unfortunately, this is often the natural progression of the economic cycle,” he says.
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