The credit crunch and a slowing economy will likely act as a business-booster for Matthew Bordwin, managing director and co-group head of real estate services at KPMG Corporate Finance LLC. In early October 2007, KPMG Corporate Finance LLC purchased New York-based Keen Consultants, with a staff of 14, for an undisclosed sum. Keen focused on the acquisition, development, and disposition of real estate portfolios for healthy and distressed companies. Its specialty, however, was disposing of assets in bankruptcy and workout situations.
Bordwin spent 11 years with Keen, founded by his father in 1982. Bordwin's deals have ranged from representing Arthur Andersen in the mitigation of hundreds of millions of dollars in leasehold liability, to acting as real estate advisor to the creditors committee in conjunction with Montgomery Ward's $300 million real estate sale. NREI recently spoke with Bordwin about his new role at KPMG Corporate Finance.
NREI: What void does KPMG Corporate Finance's real estate group fill in the market?
Bordwin: The work we do revolves around three services: evaluation of real estate, advisory and transactional services. The evaluation of real estate can be either owned property or leased property. Our advisory services encompass any kind of consulting work that a company might need in helping to make decisions regarding real estate. The bread and butter of what we do is transactional services. That's when we go to market and sell real estate.
NREI: How will shopping centers be affected if more retailers enter bankruptcy?
Bordwin: The potential result here is that if more retailers enter bankruptcy, or a workout situation, more leases will come to the market. Debtors have a right to reject or terminate their leases, so leases with no value will be returned to landlords. This has the potential effect of creating a lot more retail inventory in the marketplace that landlords will have to re-let. Secondary and tertiary markets may, in turn, suffer as retailers will opt for space in better locations due to more availability.
NREI: Are there specific issues related to assets that come to market via bankruptcy?
Bordwin: In a bankruptcy, debtors have seven months to decide what to do with their leases. Seven months is not a lot of time, especially if a retailer has hundreds or thousands of leases. In the past, retailers have been able to work through multiple holiday seasons to see if stores improve or if new merchandising or marketing strategies have worked. Now retailers need to get their leases to market immediately and create an active marketplace in as little as 30 days. Our group has done this for years. If you are a retailer that needs to market in this expedited time period, you can't take a chance on an advisor that does not understand the time pressures and nuances of the bankruptcy code and sale process.
NREI: Will foreign investors buy more U.S. assets because of the weaker dollar?
Bordwin: The answer is yes. It's actually one of the true advantages to our new relationship with KPMG Corporate Finance. One of our senior people has taken on a role where his primary responsibility is working with the overseas corporate finance groups to determine what their investors are looking for. As the dollar remains weaker [relative to other currencies], I think that trend will continue and we'll be playing an active role in that marketplace.