Journal of Property Management - January/February 2011

No one knows the woes of repositioning a troubled property like Jesse Holland, CPM, and president of Sunrise Management and Consulting, AMO, in Albany New York.

In less than a year’s time during 2010, Sunrise transformed a new 52-unit luxury condominium complex in Glens Falls, N.Y., that the developer deeded back to its lender in lieu of foreclosure after not pre-selling or selling a single unit. The project was built and hit the market during the real estate collapse.

Hired by the lender to reposition the property, Sunrise converted the Mill of Glens Falls into luxury apartments commanding rent between $1,300 and $3,000. The complex is 95 percent leased with a waiting list in place.

Sunrise’s success was no accident, though, Holland said.

“It’s not an accident when things go right,” he said.

“Planning and doing the right thing make the difference.”
Just like other troubled assets, the Mill of Glens Falls
required the management team to analyze the building’s
operations, target market and marketing and leasing
plans to determine how to improve the building’s posi-
tion.

Converting the condos to apartments was logical because the building was already designed for living use, but clearly couldn’t sell as condos. A lack of luxury apartments in the area also made the conversion a suitable alternative.

Holland said because the Mill was new, operations weren’t much of a concern. Among other things, the building’s systems were obviously in good shape, and tenant relations didn’t need improving because there were no tenants.

So the management team focused on the target audi-
ence and market and leasing. Evaluating the target audi-
ence led Sunrise to realize it could expand its prospec-
tive tenant pool by marketing to a wider geographic area.
“It was a unique product to the area,” he said. “There
was nothing similar. It was a strong enough product to
pull [residents] from a larger area.”
The management team then increased the property’s
appeal primarily through electronic media marketing
efforts.

Additionally, the management team struck a deal with the furniture company that had been renting furniture to the initial investors for staging purposes. Hauling all the furniture away would have been expensive for the rental company, so it willingly sold Sunrise the $25,000 worth of furniture already on location for $7,000.

To spruce up the building’s hallways, Sunrise teamed up with local artists and turned the corridors into art galleries, creating a home-like environment that appealed to potential renters.

Maybe most important, the company had to address the stigma attached to the building. The initial condo project had prominence within Glens Falls: Its failure did not go unnoticed by local residents.

“We worked very hard with the local community
to make sure we connected with them and had them
invested in the success of the project,” Holland said.

Ultimately, Holland said careful analysis, as well as experience, are helpful when it comes to repositioning a troubled asset.

“You have to know the strengths of your organization,” Holland said. “We were very comfortable in this position because we’ve turned around other properties before. We had a game plan in our play book and confidence in ourselves.”