Steve Denenberg Joins Michigan Avenue Real Estate Investors as Senior Vice President

Contact: Louise Edwards
773/818-3961 or 312/751-5511

FOR IMMEDIATE RELEASE

Michigan Avenue Real Estate Investors Expands…
Steve Denenberg Joins MAREI as Senior Vice President

Chicago, December 14--Steve Denenberg, 39, formerly one of the top people at Weyerhauser Realty Investors (WRI), the real estate affiliate of Weyerhauser Company in Seattle, has joined Michigan Avenue Real Estate Investors (MAREI) as Senior Vice President, announces MAREI principals Robert Judelson and Thomas Meador. (Chicago Bulls and White Sox Chairman Jerry Reinsdorf is also an inactive partner of MAREI).

Denenberg, known in real estate investment circles for his strategic capabilities in originating deals, previously served as Vice President/Investment Manager of WRI. Denenberg managed the WRI Chicago area office plus oversaw additional investments on the East Coast and in the Southeast, as part of WRI’s $2 billion investment fund.

In Denenberg’s new post at MAREI, he will help orchestrate the $250 million Michigan Avenue Real Estate Investors Opportunity Fund. The unique fund specializes in the acquisition of stressed developments across the country, such as failed condo conversions or uncompleted subdivisions. MAREI turns around the properties and re-markets them at attractive prices.
“We are thrilled to have Steve Denenberg be part of our team, helping us meet the needs of our rapidly expanding marketplace,” explains Michigan Avenue Real Estate Investors CEO Tom Meador.

Denenberg holds a bachelor’s degree in advertising from the University of Colorado and an MBA from Duke University’s Fuqua School of Business. He resides in Glen Ellyn, Illinois with his wife and three children.

MAREI has offices in Chicago and Northbrook, Illinois, with current holdings and receivership operations in Chicago, Milwaukee, Indianapolis, San Antonio, Houston, Dallas, Colorado Springs, Denver, and areas of North and South Carolina.

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The Business Journal of Milwaukee -- October 30, 2009

Chicago firm eyes Milwaukee for properties

by Pete Millard

A real estate investment group comprising some heavy and wealthy hitters based in Northbrook, Ill., is scouting for good deals on residential properties in southeast Wisconsin.

Michigan Avenue Real Estate Investors, a three-year-old company owned by Bob Judelson, Tom Meador and Jerry Reinsdorf, chairman of the Chicago White Sox and Bulls, is leveraging its experience and wealth by acquiring distressed undeveloped subdivisions, condominiums and apartments. The move by the group could help shake up the stagnant Milwaukee residential real estate market, which has been slowed in recent months by the current economic downturn.

“We’re seeking properties in good markets, in good locations and at good prices,” said Judelson, who also is a co-owner with Reinsdorf of the White Sox.

While Michigan Avenue Real Estate Investors has yet to close on a property in the Milwaukee area, Meador said he’s had several discussions with bankers and others about properties in southeast Wisconsin. The company placed a bid on a Dane County property earlier this year, but was outbid by a competing company, Meador said.

“Within five years we’ll have a meaningful presence in Milwaukee,” said Meador.

Reinsdorf is actually an inactive principal in Michigan Avenue Real Estate Investors. However, he was an active partner with Judelson and Meador in the 1970s and 1980s in Balcor Co., a Chicago real estate company that was sold to American Express for more than $100 million in the late 1980s.

Michigan Avenue Real Estate Investors, which represents more than a half-dozen high-net-worth families, has accumulated nearly $50 million in a fund that will give the company leverage to buy up to $200 million in distressed residential properties, Meador said.

Judelson and Meador would not disclose specific properties they are considering in the Milwaukee area. With several condominium projects mired in foreclosure proceedings, including the Park Lafayette and 606 West Wisconsin projects, and a handful of single-family home subdivisions, there is no shortage of possible acquisitions for Michigan Avenue Real Estate Investors.

In early October, Meador said, the company purchased 157 unsold condo units in Schaumburg, Ill., for $8.9 million. That puts the value of the units at $57,000, about half of what the original developer paid several years earlier.

“We’ll manage them as rentals and when the time is right, sell them,” he said.

Michigan Avenue Real Estate Investors expects to find the same kind of opportunity in southeast Wisconsin.

Indiana Business Journal -- October 24, 2009

Opportunists hunt deals in commercial real estate

October 24, 2009

Just about every player in the real estate business—whether individual investor, private-equity fund or publicly traded company—is trying to raise capital to take advantage of what they see as an inevitable shakeout in commercial property.

More than $3 trillion in real estate loans, many of them the short-term and interest-only variety, come due in the next five years. Few owners have any equity left in their buildings, let alone enough to meet the higher thresholds banks are demanding for refinancing. And funding from commercial mortgage-backed securities—a $1 trillion funding source just three years ago—has disappeared entirely.

Meanwhile, banks have resisted calls to take drastic markdowns on their real estate portfolios, opting instead to wait out the market for more favorable valuations or an assist from Uncle Sam.

“Equity has been wiped out in virtually every real estate transaction—the question is, can you hold on until the market bails you out?” said Gene Zink, founder of Chicago-based Strategic Capital Partners LLC and a former longtime executive at locally based Duke Realty Corp.

“At some point, the regulators are going to call the banks out on bad loans,” he said. “At that point, there will be some pretty dramatic decreases in value in real estate.”

If banks are forced to reduce values to realistic levels, buyers are likely to come off the sidelines. More sales would give brokers and leasing agents an opportunity to compete for new business. And it would be good news for tenants since properties with murky ownership are less likely to pay broker commissions to attract deals or spring for tenant buildouts, said John Robinson, executive vice president in the local office of Chicago-based Jones Lang LaSalle.

“The whole market is on hold right now because value hasn’t been determined—foreclosures will set the floor,” Robinson said. “Banks need to either prove a property is worth what they have on their books, or get it off their books.”

Potential local targets for vulture investors include M&I Plaza, the Maxwell condo project downtown, Woodfield Crossing on the north side, and Metropolis mall in Plainfield.

Where banks used to loan 75 percent of a building’s value, now they’re doing 50 percent, said Zink, who expects the government will step in with programs to add liquidity to the commercial market like it did with the first-time homebuyer tax credit for residential property.

“The only transactions that are happening are fire-sale transactions where someone has thrown in the towel,” he said. “Clearly, as we recapitalize the real estate industry, the losers will be people who borrowed money two, three or five years ago. The winners will be those who have new capital that can take advantage of the pain that results from the refinancing.”

Zink’s Strategic Capital Partners has a $1 billion opportunity fund that’s fully invested, and it has set aside a “large amount of money” to see its properties through any wide-scale revaluation.

He thinks publicly traded real estate investment trusts, or REITs, will be the biggest players in snapping up distressed properties since they have access to public capital. That includes locally based Simon Property Group Inc., Duke Realty and Kite Realty Group Trust, where Zink serves on the board.

Dozens of private funds claim to have raised hundreds of billions of dollars to buy distressed assets, but Zink is skeptical. He figures some of the funds are exaggerating their numbers to attract attention from potential investors and the banks that hold properties they are targeting.

One group that has had success raising money is Chicago-based Michigan Avenue Real Estate Investors. The company is about halfway toward its goal of raising $50 million for an opportunity fund that will buy up to $250 million in distressed real estate. The fund is buying properties in Chicago, San Antonio and Denver and might buy in Indianapolis soon.

The fund’s focus is on residential properties, particularly unfinished or unsold condo developments that can be converted into apartments until market demand returns for condos, said Tom Meador, the fund’s CEO and an IU grad.

A big gap remains between what buyers are willing to pay and what sellers will accept, Meador said, so for now he and his partners are trying to cultivate relationships with banks that ultimately will decide which property loans are renegotiated and which are foreclosed.

Banks will favor funds that have capital to close on such deals. Among the investors in previous funds from Michigan Avenue is Chicago Bulls and Chicago White Sox Chairman Jerry Reinsdorf.

The company launched its first real estate opportunity fund in early 2007 after the principals got a peek at some bank balance sheets.

“We knew the banks had troubles, but when we got into their portfolios, oh my gosh,” Meador said. “They’re going to have to move eventually. They can’t sit on these problems in perpetuity.”

It might take a little prodding from the banks’ auditors or the federal government, he said.

The fund likes Indianapolis for its stability and growth and may also buy single-family home lots if the price is right.

Chairman Bob Judelson is predicting a boom in residential real estate to rival the 2005 run. The country’s population continues to grow, and people need a place to live.

“If Ford or GM stopped building cars for two years, Americans would be short of cars,” Judelson said. “If we don’t build lots, there won’t be anywhere to stick a home.”

Timing has worked out better for some investors than others. A group led by locally based Venture Real Estate tried to put together a $30 million vulture fund in December 2007, but the effort fizzled with just a few million dollars in commitments.

The group, which included prominent developers Paul Kite and Paul Rioux and Marion County Prosecutor Carl Brizzi, wanted to buy unsold condo properties in Florida but couldn’t find enough tangible properties to show potential investors, said Jeff Sealey, who briefly served as the fund’s managing director.

The timing is better now, but challenges remain.

“The bank owns half the real estate in town,” said Sealey, a former lender at Charter One. “The problem is finding the money and getting people off the fence.”

Crain's Chicago Business - August 2009 (click page to enlarge)

Real Estate Finance & Investors - July 2009 (click page to enlarge)

Michigan Avenue Real Estate Investors Press Release - 2009

‘Home Run’ Philosophy for New Firm…Michigan Avenue Real Estate Investors Say Load your Bases with Real Estate

It’s not a time of gloom & doom in the multi- and single-family residential real estate industry, according to noted real estate investors Robert Judelson and Thomas Meador. “We will always admit to the conservative, long-term benefits of investing and operating real estate,” says Judelson.

Judelson and Meador are the active principals (Chicago White Sox Chairman Jerry Reinsdorf is an inactive partner) of Michigan Avenue Real Estate Investors, with offices at 737 N. Michigan Avenue in Chicago and at 400 Skokie Blvd. in Northbrook, IL, as well as in Park City, Utah and San Antonio, Texas.

Michigan Avenue Real Estate Investors Opportunity Fund provides investments in the apartment, condominium and single-family real estate arena to institutions and individuals. The fund acquires properties located in choice markets across the country. Current holdings and receivership operations are in Atlanta, Chicago, Colorado Springs, Dallas, Denver, Houston, San Antonio, plus areas of North and South Carolina.

‘Michigan Avenue REI offers wise and conservative real estate investments for smart people in today’s economy,” explains Meador. “We stress value—intrinsic value, conservatism and investment patterns that don’t require rosy projections or lofty goals, just plain common sense.”

The individuals who comprise Michigan Avenue REI have decades of real estate experience both from the acquisition stage through the ownership and sales phases, from land development to residential and commercial development, management and consulting.

Most importantly, they know the problems encountered by developers and Wall Street people who utilized “financial engineering”—those who created value by simply layering properties with varying types of debt with often fluctuating interest rates and unrealistic projections of future value.

“Large public home builders facilitated mortgage lending by enabling the process and altering it to the point where often unqualified buyers didn’t need to provide income or tangible net worth in order to obtain a loan,” explains Judelson. “When the bubble broke, there were streams of broken dreams and financial ruin.”

In stealthy, strategic moves across the country, Michigan Avenue REI has been acquiring properties that meet its standards for investment/value--always stressing quality locations in real market, based on true real estate evaluation.

“Now, we are ready to open up our company’s services and investment opportunities, and unveil Michigan Avenue Real Estate Investors,” smiles Judelson. “We’ve expanded the playing field!”

Real estate investment opportunities for institutions and individuals start at $500,000 to participate in Michigan Avenue REI’s current opportunity fund.

Available real estate and financial services include: Asset Management, including receivership; Land Investment; The Model Home Sale Leaseback Programs; and, in the future, Online Brokerage Program with Reduced Commissions,

• Asset Management and receivership include financial and legal expertise, including building, zoning and development arenas. Plus, capital to inject to fund restructuring, modify debt or buy out a recalcitrant partner. Michigan Avenue REI can also act as a receiver, if required, through its affiliate BJT Investments, LLC.

• Land Investment includes two programs designed to help builders with capital needs for land. For Land Banking, the firm acts as banker purchasing land (zoned, plotted single family lots) from the builder or third parties; and provides capital to install infrastructure.

• The Model Home Sale Leaseback Program utilizes a sale leaseback program through Michigan Avenue REI’s affiliate, FFB Equity partners (FFBEP). Sale price is based on appraised value with appropriate discounts. Term is normally two to three years, based on builder needs and the market. Structure is a Triple Net Structure with lessee responsible for all expenses and returning model home to like-new condition upon lease expiration.

Future program:

• Online Brokerage Program with Reduced Commissions services will feature Michigan Avenue REI’s web managed brokerage unit, eSellhouse.com. Using the high-traffic web eliminates high broker commissions and open houses, keeping more dollars in the seller’s pocket.

For further information about Michigan Avenue REI, contact Bob Judelson at 312.342.1500 or Tom Meador at 847.498.6400.

MICHIGAN REAL ESTATE INVESTORS CO-FOUNDERS BACKGROUND:

Judelson formed JMB Realty in 1969.

In 1973, Judelson and Reinsdorf co-founded the Balcor Company, a diversified real estate investment company that grew into one of the largest real estate syndicators in the U.S; they sold it to American Express in 1982.

In 1988, the partners founded Bojer Financial, Ltd., a real estate investment and development company that participated in financing, development and operation of two resident country club developments in Palm Beach, FL, plus developments in Deer Valley, UT and San Antonio, TX. Judelson was also a participant in the accumulation and acquisition of one of the largest privately owned parcels of land in the Phoenix/Tucson area, which was sold to a prominent developer.

Meador started with the Harris Bank in Chicago and joined Balcor, before it was sold to American Express. In 1990, as Chairman of Balcor, he directed the strategic disposition for American Express that was finalized in 1998. In 1995, Meador also became Sr. V.P. of Real Estate for American Express and in charge of building a best-in-class worldwide real estate delivery organization.

In 1990, Judelson and Reinsdorf purchased a 700-acre parcel of land in San Antonio which has become one of the most successful developments (“The Heights at Stone Oak”) in the area featuring over 1,000 lots of varying sizes.

In 2005, Judelson and Meador decided to start working on something big. And several years later came Michigan Avenue Real Estate Investors.

Personal Notes:

Judelson is a Director of the Chicago White Sox baseball team and also the Chicago Bulls basketball team, and graduated from Northwestern University.

Meador is a Director of Security Capital Preferred growth, a private Real Estate Investment Trust with both a BA in Economics and an MBA in Finance from Indiana University

Reinsdorf is an attorney, CPA, Specialist in Real Estate Securities and Chairman of the Chicago Bulls and the Chicago White Sox teams, and graduated from the Northwestern School of Law.