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       Distressed Assets Mastermind
       Groups, The 90’s and Now, and
         How Banks Can Minimize
       C...
Brecht
Palombo::
 Hey,
good
morning.
This
is
Brecht
Palombo:,
and

thanks
for
joining
us
on
this
call
again
today.
I
have
...
approach,
where
we
knew
where
there
was
some
great
acPvity
going,
so

we
would
buy
the
land
across
the
street
from
some…
e...
Ken
Hecht:
 
        So,
it
was
a
real
Chinese
fire
drill
to…
to
lease
that

thing
up
as
quickly
as
possible,
and
you
reall...
Ken
Hecht:
 
         So,
it
was
a
very…
it
was
driven
by
having
this
tenant

in
their
pocket,
type
of
thing.

Brecht
Palo...
Brecht
Palombo::
 That’s
interesPng
to
note.
And,
so,
tell
me
a
liGle
bit…

let’s
move
forward.
Now
it’s
15
years
later;
h...
us
a
liGle
bit
about
how
you
build
your
groups,
and
how
they
funcPon,

who
you
invite
into
them.
Because,
one
of
the
thing...
Brecht
Palombo::
    Okay.

Ken
Hecht:
 
        …in
each
group.

Brecht
Palombo::
    Okay.
And…
and
so,
it’s
a
breakfast...
Brecht
Palombo::
     Right.

Ken
Hecht:
 
        In…
and,
this
is
all
within
an
environment
where

they’re
trying
to
kee...
but
just
by
really
knowing
what
they’re
doing
and
posiPoning
the
property

correctly
for
sale.

Brecht
Palombo::
 Right,
o...
Ken
Hecht:
 
        …in
my
opinion.

Brecht
Palombo::
 Okay.
All
right,
well,
I
know
you’re
busy,
but
I
want
to

get
into...
Ken
Hecht:
 
          All
of
New
England
is
good.
We
also
like
the
Albany,

New
York
market.
One
of
my
partners
has
exper...
distressedpro.com
is
the
home
to
BankProspector

BankProspector is an online database of the
REO and distressed mortgage d...
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Distressed Asset Mastermind Groups

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In this episode of the Distressed Property Professional’s Podcast series, Ken and I talk about:
* How the Wang Towers deal went together
* Differences and similarities between opportunities in the 90s and now
* How to put together effective distressed assets networking groups
* What banks should do to minimize their commercial real estate losses
* A forecast for the future of distressed CRE opportunities

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Distressed Asset Mastermind Groups

  1. 1. [dp] Distressed Assets Mastermind Groups, The 90’s and Now, and How Banks Can Minimize Commercial Real Estate Losses Brecht Palombo & Ken Hecht PODCAST TRANSCRIPT www.distressedpro.com 1 of 13 Wednesday, January 6, 2010 | distressedpro.com
  2. 2. Brecht
Palombo::
 Hey,
good
morning.
This
is
Brecht
Palombo:,
and
 thanks
for
joining
us
on
this
call
again
today.
I
have
Ken
Hecht;
Ken
is
 somewhat
famous…
or
he
had
a
somewhat
famous
deal
here
in
the
New
 England
area,
called
the
Wang
Towers—which,
hopefully,
we’ll
hear
about
 a
liGle
later
on
in
the
call.
Ken
is
known
for…
he’s
put
together
more
than
 4,000,000
feet
in
deals
for
Wal‐Marts
all
throughout
New
England.
And,
 before
that,
Ken
was
a
broker
at
CBRE,
where
he
actually
started
and
ran
 their
retail
group
for
a
Pme.
Ken,
we’re
psyched
to
have
you
the
call
today.
 Thanks
for
being
here. Ken
Hecht:
 
 You’re
welcome.
Great
to
be
on
the
call. Brecht
Palombo::
 And,
I
know
you’re
a
busy
guy,
so
I
want
to
just
cut
 right
into
it,
and…
why
don’t
you
tell
us
just
a
liGle
bit
about
what
you’ve
 been
doing
during
the
run‐up
pre‐crunch,
if
you
would…
or
if
you
even
 want
to
go
back
a
liGle
bit
further,
and
give
us
a
career
summary
so
people
 know
who
they’re
talking
to,
or
who
they’re
listening
to. Ken
Hecht:
 
 Well
that’ll
be
great.
Brecht,
thanks
a
lot
for
giving
me
 the
opportunity
to
be
on
the
call.
Basically,
I
went
to
work
with
CB
Richard
 Ellis—at
that
Pme
it
was
Coldwell
Banker
Commercial
in
1986—in
1988,
I
 won
the
Rookie
of
the
Year
award
for
the
Northeast
in
investment
sales;
I
 sold
13
buildings
my
first
year
in
the
compePPon.
And,
then
the
wheels
fell 
 off
the
bus
in
’89,
which
is
apropos,
which…
with
respect
to
the
Wang
 Tower
deal… Brecht
Palombo::
 Right. Ken
Hecht:
 
 …and
then,
really
aZer
that,
I
went
to
Whi[er
 Partners
for
five
years,
where
I
became
a
partner.
And
then,
basically,
I
was 
 the
last
partner
in,
and
we
sold
half
the
company
to
CB;
it
became
CB
 Richard
Ellis
Whi[er
Partners,
where
I
then
founded
the
retail
group
and
 ran
the
retail
group—which
was
really
a
very
investment‐oriented
group,
 including
Bill
Moylan
and
Chris
Angelone,
who
are
sPll
over
at
CBRE;
good
 friends
of
mine.
Then,
I
developed
a
liGle
client
called,
“Wal‐Mart”
while
I
 was
there,
based
on
a
referral
from
an
old
college
buddy
from
20
years
 ago.
And,
basically,
once
I…
aZer
September
11,
2001,
I
rePred
from
the
 partnership,
and
really
rolled
out
a
program
in
Maine,
MassachuseGs
and
 Rhode
Island
for
Wal‐Mart,
and
ended
up
doing
about
4,000,000
feet
for
 them.
But,
both…
mainly
acquisiPons
and
ground‐up
developing,
and
a
 few
disposiPons
thrown
in
there.
Then—really
in
the
mid‐2000s—we
 started
doing
our
own
development,
and
we
built
drug
stores,
and
we
built
 shopping
centers,
and
it
was
really
the
flea
jumping
on
the
elephant
 2 of 13 Wednesday, January 6, 2010 | distressedpro.com
  3. 3. approach,
where
we
knew
where
there
was
some
great
acPvity
going,
so
 we
would
buy
the
land
across
the
street
from
some…
either
Wal‐Mart
or
 other
major
development,
then
pop
up
a
smaller
shopping
center.
So,
 what’s
happened
is…
in
the
run‐up,
we
really
developed
all
throughout
the
 high
Pmes,
and
now
we’re
in
a
very
low
Pme.
But,
fortunately—knock
on
 wood—for
us,
we’ve
picked
great
locaPons,
and
we’re
basically
very
close
 to
100%
leased,
and
we
sold
some
assets
and
made
money,
and
it’s
 actually
a
preGy
good
story.
And,
now
we’re
ready
to
just
buy
up
a
storm;
 we’re
loaded
with
addiPonal
capital
and
lots
of
experPse,
and
we’re
really
 out
there
right
now,
working
hard
to
acquire
other
assets. Brecht
Palombo::
 Okay.
Well,
I
want
to
get
into…
I
want
to
get
into
all
 about
what
you’re
doing
now
as
you
reposiPoned,
as
a
lot
of
people
have
 reposiPoned,
but…
take
me
back,
just
for
a
minute…
this
deal…
I
knew
 about
this
deal
years
ago,
before…
I
mean,
I’ve…
I’ve
been
hearing
about
 this
deal
from
anybody
who’s
been
in
business…
in
the
real
estate
business
 in
New
England...
as
long
as
I’ve
been
around,
I’ve
been
hearing
about
this
 deal.
And,
then
I
recently
had
the
opportunity
to
meet
you
at
a
talk
I
was
 giving,
and…
and,
you
announced
yourself
as
the…
the
broker
on
this
deal,
 and
so,
it’s
the
Wang
Tower
deal…
just
take
us
back
a
liGle
bit,
and…
what
 was
it,
and
how
did
it…
how
did
you
get
it?
How
did
it
work
out
for
your
 buyer?
And,
just
lay
it
out
for
us,
if
you
would. Ken
Hecht:
 Well,
it’s
an
interesPng
story,
and
I
think,
from
a
Pming
 perspecPve,
it’s
interesPng
to
note
that…
as
we
talk
later
on—maybe—in
 the
call,
we’ll
touch
on…
how
does
this
market
relate
to
that
market?
In
 1987,
the
stock
market
crashed.
In
‘89,
as
we
discussed,
the
wheels
fell…
 began
to
fall
off
the
bus
in
the
commercial
real
estate
business.
And,
it’s
 interesPng
to
note
that
the
Wang
Tower
sold
in
1994,
which
was
generally
 looked
at
as
the
boGom
of
the
market.
The
property
was
1.3
million
square
 feet,
and
it
sold
for
five
hundred
twenty‐five
thousand
dollars. Brecht
Palombo::
 Wow. Ken
Hecht:
 
 Now,
that
was
around
thirty‐something
cents
a
foot.
 But,
what
you
have
to
remember
was:
Wang
was
going
to
do
a
short‐term
 leaseback
on
the
property
on
a
porPon
of
the
building.
So,
you’d
have
 them
in
a
porPon
of
the
building
for,
say,
a
year,
and
aZer
which,
you’d
be
 lugging
the
whole
1.3
million
square
feet
of
empty
space
to
the
tune
of
 about
five
million
a
year
of
tax
and
operaPng
expenses. Brecht
Palombo::
 Wow. 3 of 13 Wednesday, January 6, 2010 | distressedpro.com
  4. 4. Ken
Hecht:
 
 So,
it
was
a
real
Chinese
fire
drill
to…
to
lease
that
 thing
up
as
quickly
as
possible,
and
you
really
didn’t
have
to
get
that
much
 rent
for
it.
What
you
want
to
do
is
cover
these
operaPng
expenses
and,
of
 course,
get
as
much
rent
as
you
could. Brecht
Palombo::
 Right. Ken
Hecht:
 
 Also,
in
that
deal,
the
actual
property
that
sold
for
five
 hundred
twenty‐five
thousand
dollars
came
with
a
parking
raPo
of
one
car
 per
thousand
parking.
You
had
an
opPon
to
buy
the
remainder
of
the
 parking—which
would
get
you
up
to
a
reasonable
office
parking
raPo—but
 that
opPon
came
with
a
six‐million‐dollar‐price
tag. Brecht
Palombo::
 Wow. Ken
Hecht:
 
 So,
you
really
had
to
think
clearly.
The
buyers
who
 bought
that
were
Brian
Kelly,
Chris
Kelly,
Dan
Doherty
and
Lou
Alvarado;
 they
each
threw…
I
think
they
threw
twenty‐five
thousand
dollars
in
a
head
 for
the
total
of
one
hundred
thousand
dollars
at
the
aucPon… Brecht
Palombo::
 Wow. Ken
Hecht:
 
 …and
resulted
in
a
lot
of
work
on
their
part.
But,
I
 think
they
sold
probably
three,
four
years
later,
and
each
made
probably
 around
fiZeen
million
dollars. Brecht
Palombo::
 Geez! Ken
Hecht:
 
 So,
it
was
preGy…
preGy
nice
leverage. Brecht
Palombo::
 Yeah,
that’s… Ken
Hecht:
 
 But,
what
happened
is,
they
also
had…
right
now,
 there’s
a
NaPonal
Amusements
Theatre
up
there… Brecht
Palombo::
 Yeah. Ken
Hecht:
 
 …so,
they
had
NaPonal
Amusements
Theatre
in
their
 pocket.
And,
on
some
of
the
excess
land,
they
actually
put
the
theatre,
and
 did
a
theatre
deal. Brecht
Palombo::
 Wow. 4 of 13 Wednesday, January 6, 2010 | distressedpro.com
  5. 5. Ken
Hecht:
 
 So,
it
was
a
very…
it
was
driven
by
having
this
tenant
 in
their
pocket,
type
of
thing. Brecht
Palombo::
 Right. Ken
Hecht:
 
 So,
it’s
probably
the
greatest
real
estate
deal
that
I’ve
 ever
known
in
New
England,
in
terms
of
buying
at
the
boGom
and
selling
 at
the
top. Brecht
Palombo::
 Right.
Well,
it’s
not
over
yet,
so… Ken
Hecht:
 
 No. Brecht
Palombo::
 …we’ll
see
what
happens. Ken
Hecht:
 
 That’s
right. Brecht
Palombo::
 So…
so,
you
bought
that
at
a
foreclosure
aucPon,
just
 to
clarify? Ken
Hecht:
 
 No,
that
was…
that
was
not
a
foreclosure
aucPon;
it
 was
an
aucPon
agreed
to…
Aetna
had
the
debt—the
insurance
company,
 Aetna… Brecht
Palombo::
 Yeah. Ken
Hecht:
 
 …and,
they
were
represented
by
Meredith
&
Grew,
 and…
excuse
me,
we
represented
Aetna,
and
Wang
was
represented
by
 Meredith
&
Grew.
Wang
was
threatening
to
give
the
building
back
to
 Aetna;
Aetna
didn’t
want
it,
so
they
both
agreed
to
hire
the
respecPve
 brokers,
and
work
together
to
aucPon
this
thing.
So,
it
was
not
a
 foreclosure
aucPon;
it
was
a
couple
guys
looking
themselves
in
the
 eyeballs
saying,
“Why
don’t
we
work
together
to
get
rid
of
this
thing?” Brecht
Palombo::
 Right,
so
it’s
a
consensual
sale… Ken
Hecht:
 
 Correct. Brecht
Palombo::
 Okay,
all
right. Ken
Hecht:
 
 That’s
right. 5 of 13 Wednesday, January 6, 2010 | distressedpro.com
  6. 6. Brecht
Palombo::
 That’s
interesPng
to
note.
And,
so,
tell
me
a
liGle
bit…
 let’s
move
forward.
Now
it’s
15
years
later;
how…
how
is
this
different,
or
 how
is
this
the
same
as
what
we
went
through
then? Ken
Hecht:
 
 I
think,
during
that
period,
there
was
a
lot
of
 overbuilding
that
occurred—in
office,
parPcularly.
And,
in
this
market,
we
 don’t
have
as
much
overbuilding.
The…
the
economy
back
then
actually
 was…
it
kept
growing.
And,
our
economy,
of
course
we’ve
hit
 unemployment
rates
not
seen
for
a
very
long
Pme—since
the
early
70s. Brecht
Palombo::
 Yeah.
Right. Ken
Hecht:
 
 So,
there’s
a
difference
there.
And,
I
also
think—at
 that
Pme—the
FDIC
and
the
RTC—they
took
over
assets
fairly
rapidly… Brecht
Palombo::
 Right. Ken
Hecht:
 
 …and
began
to
cleanse
the
market. Brecht
Palombo::
 Yeah. Ken
Hecht:
 
 And,
they
shut
down
a
lot
of
banks,
including
out
here
 in
New
England.
And,
they
grabbed
these
assets,
and
they
just
turned
 around
and
started
selling
them.
Right
now,
we
have
a
very
different
 approach
that
the
lenders
are
taking,
which
is—everyone’s
calling
it
 different
things—kick
the
can
down
the
road,
extend
and
pretend
on
the
 loans.
And,
I
think
that
it’s
a
strategy
that
is
occurring
right
now,
but
I
think
 it
can
only
solve
so
many
of
the
problems. Brecht
Palombo::
 Yeah. Ken
Hecht:
 
 So,
I
think
what’s
going
to
happen
is
it’s
going
to…
it’s
 going
to
delay
some
of
the
issues,
but
it’s
not
going
to
solve
many
of
the
 issues. Brecht
Palombo::
 Sure. Ken
Hecht:
 
 So,
I
think
that
it’s
a
compressed
situaPon;
there’s
just
 more
and
more
compression
building
up
in
the
system. Brecht
Palombo::
 Right.
All
right,
well
I
want
to…
I
want
to
ask
you
about
 a
couple
of
things;
I
know
you’re
a
very
acPve
networker,
and
you
have
 different
groups
and
whatnot,
and
I…
I
was
wondering
if
you
could
just
tell
 6 of 13 Wednesday, January 6, 2010 | distressedpro.com
  7. 7. us
a
liGle
bit
about
how
you
build
your
groups,
and
how
they
funcPon,
 who
you
invite
into
them.
Because,
one
of
the
things
that
I’m
hearing
from
 some
of
my
members
is
that
they’re
looking
for
deals,
and
they’re
looking
 at
the
network,
and
I…
it
seems
like
you
have
a
preGy
efficient
machine.
 Can
you
talk
a
liGle
bit
about
what
you
do? Ken
Hecht:
 
 Sure.
Well,
first
is
to
build
relaPonships
over
a
very
 long
period
of
Pme.
So,
what
you
want
to
do,
I
think,
is…
we’re
very,
very
 good
about
making
sure
we
have
our
contact
database
up‐to‐date;
that
we
 have
different
types
of
product…
prospect
categorizaPon.
So,
we
have
 around
6,000
folks
in
our
database,
but
they’re
all
coded—retail
broker,
 owner,
banker—whatever
type
of
thing.
So,
that’s
really
important,
to…
to
 build
a…
an
infrastructure,
so
that
when
this
informaPon
you
get,
you
 can…
you
can
deal
with
it.
And
then,
on
a
smaller,
more
networking
basis,
 what
I’ve
done
is—in
both
Providence
and…
Providence,
Rhode
Island
and
 Portland,
Maine—I’ve
pulled
together
a
group
of
the
highest
level
of
 professionals
in
those
markets
that
are
in…
all
in
the
real
estate
business,
 but
in
different
parts
of
the
real
estate
business.
So,
we’ve
gone
ahead
and
 set
up
a
group
in
each
of
those
markets
that
has
a
top
aGorney
firm,
a
top
 commercial
real
estate
brokerage
firm,
top
accounPng
firm,
top
mortgage
 banker,
and—as
it
turns
out—top
aucPoneer,
and…
and
then
us,
who
 would
be
capital
providers— Brecht
Palombo::
 Right. Ken
Hecht:
 
 —capital
providers
meaning
buyers,
or
buyers
of
debt,
 or
providers
of
capital
to
certain
situaPons
to
make
it
all
work
between
a
 lender,
and
perhaps
the
borrowers,
and
needs
to
have
a
soluPon. Brecht
Palombo::
 Right. Ken
Hecht:
 
 And,
I’d
say
those
are
the
key
components,
and
to
 develop
relaPonships
within
those
networking
groups
so
that
people
feel
 comfortable
and
confident.
And,
the
people
in
those
groups
should
be
 people
who
know
what
to
do
with
informaPon;
certain
informaPon
needs
 to
stay
inside
those
groups,
and
certain
informaPon
would
be
available
to
 be
used
outside
of
those
four
walls
of
that
group.
And,
people
have
to
be
 the
kind
of
people
that
know
which
informaPon
is
confidenPal,
and
which
 informaPon
you
can
use. Brecht
Palombo::
 Yeah,
okay.
And,
how
oZen
do
you
meet? Ken
Hecht:
 
 Probably
about
once
every
two
months… 7 of 13 Wednesday, January 6, 2010 | distressedpro.com
  8. 8. Brecht
Palombo::
 Okay. Ken
Hecht:
 
 …in
each
group. Brecht
Palombo::
 Okay.
And…
and
so,
it’s
a
breakfast
thing,
generally? Ken
Hecht:
 
 Generally,
it’s
breakfast;
we’ve
thought
about
having…
 having
it
with
aZernoon
or
evening
cocktails,
etcetera,
but
everyone’s
 agreed
that—let’s
make
it
pure
business,
and
let’s
have
breakfast,
and
 let’s…
let’s
get
work
done.
And,
it’s
worked
out
preGy
well,
and
it
can
move
 preGy
quickly. Brecht
Palombo::
 Yeah.
Well,
I
appreciate
you
le[ng
us
in
on
that
a
liGle
 bit.
I
had
another
quesPon
here
that
I
want
to
ask
you,
which
is:
what
do
 you
see
as…
I
know
you’re
close
to
a
lot
of
lenders
and
really
close
to
a
lot
 of
people
in
the
distressed
market
place,
but
what
do
you
see
as
the
 biggest
challenge,
really,
that’s
facing
banks
today? Ken
Hecht:
 
 Well,
they’ve
got
this
situaPon
where
the…
the
assets
 that
they’ve
loaned
against,
of
course,
have
declined
in
value
to
varying
 degrees,
and
they’ve
got
issues
to
deal
with,
and
they’re
just
really
trying
 to
solve
these
issues.
So,
one
of
the
real
trends
right
now
is
to
really,
if…
if
 the
borrower
either
has
equity,
or
has
a
plan,
or
has
a
friend
with
equity,
 they
can
put
more
money
into
the
deal,
they
can
rewrite
the
loan,
and
 instead
of
the
loan
being
in
what’s
called,
“non
accrual,”
it
can
be
back
into
 the
good
category
of
loans.
So,
that’s
really
their
primary
objecPve.
And,
 somePmes
the
borrower
may
not
have
the
equity;
they
may
not
have
the
 ability
to
get
the
equity,
and
if
that’s
the
case,
then
they’re
probably…
the
 banks,
in
their
first
instance,
are
going
to
want
to
sell
the
debt.
I
think
that
 that’s
their
easiest
and
quickest
soluPon—to
let
someone
else
deal
with
 the
problem—and,
that’s…
if
you
look
at
it
like
as
the
Navy
Seals,
Marine
 Corps,
then
the
Army
shows
up… Brecht
Palombo::
 Yeah. Ken
Hecht:
 
 …we’re
in
the
Navy
Seal
part,
where
that’s
really
their
 first
stop
of…
of
potenPal
soluPons;
if
they
can’t
sell
the
debt,
then
I
think
 that
they
are
faced
with
taking
back
the
property… Brecht
Palombo::
 Right. Ken
Hecht:
 
 …and
dealing
with
all
the
issues
that
come
with
that. 8 of 13 Wednesday, January 6, 2010 | distressedpro.com
  9. 9. Brecht
Palombo::
 Right. Ken
Hecht:
 
 In…
and,
this
is
all
within
an
environment
where
 they’re
trying
to
keep
their
Per
1
capital
raPos
up. Brecht
Palombo::
 Right. Ken
Hecht:
 
 So,
their
Per
1
capital
raPo
is
declining
as
they
accrue
 for
these
losses,
and
then,
I
think
that
they
conPnue
to
accrue
for
these
 losses.
And
the
bank,
then,
can
get
weaker
and
weaker
on
paper,
and
it
 puts
more
pressure
on
them
from
the
government
to
increase
the
raPos.
 So,
they’re…
they’re
between
a
rock
and
a
hard
spot. Brecht
Palombo::
 Right.
Now,
I
know
your
primary
focus
is
now
 acquisiPon—and,
I
want
to
talk
about
that
in
a
minute—but,
just
to
stay
on
 the
challenges
facing
the
banks
today,
if
you
were
working
for
lenders,
 what
would
you
be
advising
them
to
do,
as
a
general
strategy
today? Ken
Hecht:
 
 I
would
be
advising
them
to
really
hire
consultants
are
 value
ad‐oriented,
and
who
are
capital
preservaPon‐oriented,
and
they
 should
be
thinking
about
preserving
value
and
enhancing
value,
but
on
the
 low‐lying
fruit
basis.
We
know
that
there’s…
no
bank
is
going
to
retrofit
an
 enPre
100,000‐foot
building
and
do
a
complete
lease‐up;
that
would
be
a
 rare
bank. Brecht
Palombo::
 Sure. Ken
Hecht:
 
 But,
there’s
no
reason
why
you
wouldn’t
get
 construcPon
esPmates,
make
sure
your
permits
are
sPll
in
effect,
perhaps
 get
a
couple
of
leGers
of
intent
signed
with
tenants;
do
things
that
don’t
 cost
much
money,
but
that
can
have
significant
return
for
the
lender.
If
 there’s
three
million
dollars
of
upside
on
some
deal
aZer
some
developer
 spends
years
and
millions
of
dollars
in
capital,
if
there’s
three
million
there,
 well
the
bank—I
don’t
think—is
going
to
go
through
everything
it
has
to
 get
to
that
three‐million‐dollar‐“profit.”
But,
if
they
can
find
certain
low‐ lying
fruit
areas
by
dealing
with
the
right
professionals
that,
perhaps,
they
 can
get
five
hundred
thousand
dollars
of
value… Brecht
Palombo::
 Right. Ken
Hecht:
 
 …and,
increase
the
value
of
the
exisPng
property
by
 five
hundred
thousand
dollars.
So,
it’s
really
pu[ng
out
very
liGle
money,
 9 of 13 Wednesday, January 6, 2010 | distressedpro.com
  10. 10. but
just
by
really
knowing
what
they’re
doing
and
posiPoning
the
property
 correctly
for
sale. Brecht
Palombo::
 Right,
okay.
And,
I
know
I…
I
saw
you
speak
about
this
 recently—in
fact,
we
provided
a
liGle
bit
of
the
data—but,
I
thought
that
 you
had
a
lot
of
insight,
and
actually
went
much
deeper
on
the
data
than
 just
what
we
provided
you.
But,
in
terms
of
a
forecast
as
you
look
out,
 what
do
you
see,
when? Ken
Hecht:
 
 Well,
it
really…
a
lot
of
this
whole
game
is
dependent
 upon
when
loans
expire. Brecht
Palombo::
 Yeah. Ken
Hecht:
 
 When
is
a
term
of
a
loan?
So,
if
someone
did
a
ten‐ year
loan
in
the
year
2000,
then
that
loan
is
up
in
the
year
2010,
which
 would
be
next
year.
So,
a
lot
of
this
whole
game
is
around
when
do
these
 loans
expire?
And,
so,
when
you
look
at
the
data,
you’ll
find
that—in
the
 near
term,
right
now—there
are
a
lot
of
bank
loans
expiring. Brecht
Palombo::
 Yeah. Ken
Hecht:
 
 And,
then
as
we
proceed
through
the
years
up
unPl
 2017,
you’ve
got
more
and
more
Wall
Street
CMBS
loans
expiring.
So,
right
 now,
I
see
it…
if
we
look
at
in
terms
of
waves,
the
first
wave
today
is
really
 in
the
commercial
banks.
And,
when
do
those
loans
come
up?
And,
 somePmes
there’s…
there
are
problems
created
well
before
a
loan
comes
 up,
of
course,
in
many
cases,
because
there’s
either
vacancy
or
covenant
 _____
(0:17:40.4)
of
some
sort.
But,
let’s
assume
it
goes
full‐term,
to
the
 expiraPon
of
the
loan;
oZen
Pmes
there
is…
somePmes
millions
of
dollars
 of
new,
fresh
equity
need
to
be
pumped
into
deals
to
get
that
loan
to
be
 conforming,
or
to
bring
in
other
kind
of
debt.
So,
the
Pming
is…
I’d
say,
 between…
in
the
next
couple
years,
I
would
say
that
it’s
really
going
to
be
 largely
a
market
where
we’re
all
going
to
be
dealing
with
the
commercial
 banks,
and
then
ramping
up
within
that
would
be
the
expiraPon
and
 availability
of
commercial
mortgage‐backed
security
loans,
which
are
the…
 the
Wall
Street
loans. Brecht
Palombo::
 Sure. Ken
Hecht:
 
 But
that’s
a…
that’s
a
second
wave… Brecht
Palombo::
 Right. 10 of 13 Wednesday, January 6, 2010 | distressedpro.com
  11. 11. Ken
Hecht:
 
 …in
my
opinion. Brecht
Palombo::
 Okay.
All
right,
well,
I
know
you’re
busy,
but
I
want
to
 get
into
just
one
final
thing,
which
is…
what
kind
of
deals
are
you
looking
 for
out
there?
What
kind
of
deals
are
you
doing?
Tell
us…
paint
that
picture
 a
liGle
bit. Ken
Hecht:
 
 Well,
we’re…
we’ve
really
got
a
terrific
partnership
put
 together;
we’re
very
capital‐rich
at
the
moment,
and
we’re
very
experPse‐ rich.
We’ve
got
three
key
people
within
our
partnership
that
have…
 probably
between
us…
probably
knocking
on
the
door
of
75
to
100
years
of
 experience
in
retail
acquisiPon,
development
management,
etcetera,
so
 we’re
really
focused
on
retail.
So,
we’re
really
looking
for…
whether
it’s
 debt
on
retail,
or
purchasing
the
properPes
outright,
or
just
bringing
fresh
 capital
to
the
table
to
solve
a
problem
between
a
borrower
and
a
lender— anywhere
from
probably
a
couple
million
dollars
up
to
fiZeen
million
to
 twenty
million
dollars. Brecht
Palombo::
 Okay. Ken
Hecht:
 
 Now,
we’ll
also
look
at
other
product
types;
we’re
very
 entrepreneurial.
I
think
our
experPse
is…
our
super
experPse
is
in
retail;
 however,
we’ve
got
good
experPse
in
industrial
land
development,
also
 there’s
some
self‐storage
experience
in
the
background. Brecht
Palombo::
 Yeah. Ken
Hecht:
 
 So
there’s
a
variety
of
different
product
types
that
we
 would
be
able
to
act
upon,
given
the
right
circumstances. Brecht
Palombo::
 Okay.
So,
but
your…
it
sounds
like
your
primary
goal
is
 two
to
20
million
retail;
you’ll…
you’ll
buy
the
debt—or
distress
notes— you’ll
buy
the
deed,
you’ll
buy
the
actual
property,
or…
also,
it
sounded
like
 you’ll
be
an
equity
partner? Ken
Hecht:
 
 Yes,
that
is
correct. Brecht
Palombo::
 Okay,
and
where
are
you
looking?
Where
are
you… Ken
Hecht:
 
 All
throughout
New
England. Brecht
Palombo::
 Okay. 11 of 13 Wednesday, January 6, 2010 | distressedpro.com
  12. 12. Ken
Hecht:
 
 All
of
New
England
is
good.
We
also
like
the
Albany,
 New
York
market.
One
of
my
partners
has
experience
as
far
south
as
 Philadelphia.
I
really
don’t
think
that’s
really
going
to
be
our
main…
I
really
 think
it’s
going
to
be
New
England,
and
then
the
Albany,
New
York
area
 would
probably
be
the
extremiPes. Brecht
Palombo::
 Yeah,
okay,
great.
Well,
I
know
you’re
busy;
why
don’t
 you
tell
folks
how
they
can
contact
you,
and
then
we’ll…
we’ll
let
you
go. Ken
Hecht:
 
 Well,
great.
Well,
first
and
foremost,
my
phone
 number
at
work
is
978‐369‐5011,
or
you
can,
of
course,
e‐mail
at…
e‐mail
 me
at
Ken@thehechtcompany.com.
You
can
always
go
to
our
website
at
 www.hechtdev.com
–that’s
short
for
Hecht
Development,
and
Hecht
is
 spelled
H‐E‐C‐H‐T. Brecht
Palombo::
 Okay,
great.
Thanks,
Ken,
I
really
appreciate
it.
I
think
 this
has
been
a
great
call,
and
you
let
us
behind
the
curtain
on
a
couple
of
 things,
so… Ken
Hecht:
 
 That’s
great. Brecht
Palombo::
 …I
really
appreciate
it. Ken
Hecht:
 
 Well,
Brecht,
thanks
a
lot
for
the
opportunity,
and
I
 hope
to
hear
from
you
soon,
and
then
whomever
else
I
might
be
able
to
 help. Brecht
Palombo::
 Yeah,
my
pleasure.
Okay. Ken
Hecht:
 
 Thanks
a
lot. Brecht
Palombo::
 Don’t
hang
up. Ken
Hecht:
 
 Bye‐bye. Brecht
Palombo::
 Okay. 12 of 13 Wednesday, January 6, 2010 | distressedpro.com
  13. 13. distressedpro.com
is
the
home
to
BankProspector BankProspector is an online database of the REO and distressed mortgage details for more than 8,000 banks nation wide. Members use it to find bank contacts, bank owned property and distressed loan opportunities. 13 of 13 Wednesday, January 6, 2010 | distressedpro.com

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