Hilco Real Estate, which helps businesses improve leverage and cash flow by repositioning and restructuring their real estate commitments, has launched Hilco Real Estate Managed Asset Resolutions.

Headquartered in Northbrook, Ill., the new operating unit will provide “turn-key loan servicing” to lenders and other real estate investing entities on their most deeply distressed loans and REO assets. Hilco Real Estate Managed Asset Resolutions will service distressed assets in every category, ranging from single parcels of raw land to large commercial and residential projects. Initially, offices will be located in Chicago, Boston and Atlanta.

Loan servicing veteran Jerry Hudspeth will serve as CEO of the new group, which he believes will fill a large void in the real estate asset management market. Deeply distressed assets need specialized attention and unique skills to maximize value, emphasizes Hudspeth.

“Traditional servicers and lender workout groups cannot afford —or are often simply unable — to properly service these assets. We can because our business model is built on a core understanding of how to monetize distressed assets. Hilco has been doing it for 25 years,” says Hudspeth.

Hilco Real Estate Managed Asset Resolutions will conduct property valuations and develop and execute strategic resolution plans for each asset in a distressed portfolio. The group will manage all financial, legal and other compliance processes as well as provide all necessary loan and property management services.

Each property will be put through a workout or resolution process, which could include foreclosure, receivership or bankruptcy. Where a resolution requires a disposition process, Hilco Real Estate Managed Asset Resolutions will provide traditional brokerage and auction services.

Deep bench strength

Hudspeth has 25 years of financial services industry experience, which includes 14 years as president and CEO of Portfolio Financial Servicing Co. based in Portland, Ore. Established in 1992, PFSC was formed to manage and service a $360 million securitized real estate portfolio beneficially owned by The Travelers Co., The Hillman Co. and Parrish Investments.

While at Portfolio Financing Servicing, Hudspeth created and developed a portfolio management and servicing model still being used by the company. He worked closely with rating agencies, monoline insurers and major lenders and trust groups to establish industry portfolio management and servicing standards.

Joining Hudspeth on the leadership team of Hilco Real Estate Managed Asset Resolutions are Ronald Lubin, Edmund Terry and Michael Tsandilas.

Lubin, a senior executive with Hilco Real Estate, joined Hilco in 2008. He had been managing director of Boston-based Crystal Capital, where he led the real estate debt and equity investment business. Previously, Lubin spent 24 years in various senior level real estate finance groups within Bank of America and its predecessors, including Shawmut Bank.

Terry also joined Hilco Real Estate in 2008 as a senior executive, coming from Crystal Capital where he was a managing director. Earlier, Terry had been with Boston-based NewStar Financial, where he was responsible for commercial real estate structured product origination and underwriting.

Tsandilas, who has 15 years of commercial real estate loan origination and underwriting with major lenders, including Bank of America, TriSail Capital and Anglo Irish Bank, will manage the execution of workout strategies and asset management activities of the new operating unit.

Hilco’s business model ensures that lender workout groups and servicers can focus on those assets in a portfolio that best fit their core strengths, says Terry. “It will enable them to transfer to Hilco the most distressed assets, for which they have neither the expertise nor willingness to commit resources. We believe that bifurcating a portfolio using this approach will be most efficient and a win-win for everyone.”