Recognizing Opportunities

In difficult times, many under-performing properties suffer from under-capitalization and other conditions that create opportunities for seasoned asset managers.



With the presence of a set of correlated conditions, rental properties customarily undergo a downward spiral of events before reaching distressed status ...

It all starts with an under-capitalized financial structure.

A lack of access to available capital, coupled with high leverage, can lead to inadequate cash reserves.

As unanticipated expenditures occur, working capital and operating cash flow turn deficient. Scheduled maintenance is frequently the first cost to be suspended.

As much needed maintenance and renovations are deferred, suppliers of property services become debters with their increasing frustration reflected in quality of services performed. The property ultimately becomes victim to a poor public image with dwindling ability to attract quality tenants.

The Net result, in time, is a demoralizing vacancy rate on the property and excessive tenant turnover. With soaring debt and expense ratios, in addition to a poor quality tenant base, further deterioration of cash flow and working capital is inevitable.