With some predicting a commercial real estate meltdown as $1 trillion worth of loans mature in the coming years, the new venture of Jeffrey Miller and his partners appears to be well-timed.
The recently launched New Providence Group is intended to help banks and other institutions to recover as much of their investment as they can.
The firm will draw upon the experience of Miller, as well as James Patterson II, John J. Macliver III and John J. Macliver IV.
Miller recently answered questions about their venture.
PBN: Can you give a brief overview of the New Providence Group?
MILLER: New Providence Group (NPG) is a joint venture of Barrington Capital Partners and MPM Properties. The company was formed during the first quarter of 2009 and is headquartered at One Citizens Plaza in downtown Providence. As our tagline says, we provide “asset recovery solutions” to lenders, servicers, receivers and fund managers to help them work through the coming wave of commercial mortgage defaults and foreclosures.
As outsourced management and workout specialists, we complement each client’s existing in-house resources while reducing their need to hire additional employees. We provide a level of financial and real estate experience and objectivity not generally found with in-house staff.
Our mission is to minimize losses and maximize recoveries in the value of the collateral. We develop a cost-effective portfolio strategy based on thorough due diligence, hands-on management, sound property operations and realistic projections of cash flow and value. This solid foundation allows us to make informed recommendations to clients, say on whether to engage a borrower in a loan workout process, or to go straight to foreclosure.
Our ultimate goal is to preserve each asset and recover as much of its original value as possible, while meeting the needs of the client with respect to regulatory matters, capital requirements, and ultimately, the disposition of the asset.
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PBN: What made you and your partners decide to launch the firm?
MILLER: There is a rapidly growing need for our expertise and services. Commercial mortgage defaults and foreclosures are rising at alarming rates, while a projected $1.3 trillion in mortgages will be maturing through the next five years. An overall 20 to 30 percent drop in property values nationwide has put many borrowers “underwater” just as in the residential market. Those loans must be refinanced, extended or foreclosed.
No one knows where the capital will come from to refinance all that debt and how lenders will [select] which loans to extend or restructure. This will be the primary focus of the real estate industry over the next few years. The need for experienced and capable people to assist lenders in the recovery efforts will be acute. We created New Providence Group as the vehicle in which the property and construction management expertise of MPM Properties has been combined with the analytical and workout skills found in the principals of Barrington Capital Partners. We feel that New Providence Group is the ideal platform to fill the needs of lenders for asset recovery services during the coming crisis years.
PBN: How does your approach differ from other third-party servicers?
MILLER: As an objective, outsourced consultant, we have no pre-existing relationships with the lender’s borrowers or origination staff, which could result in conflicts of interest. New Providence Group is not motivated by the leasing and sales commissions sought by major national brokerage firms and therefore is not subject to potential conflicts. We see ourselves as a partner of each client and an extension of their internal management and staffing resources. We have more than 60 years of experience as fiduciaries in providing portfolio management and investment advisory services to institutional lenders, pension advisers, REITS and foreign investors. The partners of New Providence Group have also acted as principals in the acquisition, financing, management, leasing and disposition of commercial properties, so we have an in-depth understanding of an owner’s and borrower’s perspective.
PBN: What has been the response from potential clients?
MILLER: To date, the reception has been very encouraging. A portfolio strategy based on realistic cash flow and value projections makes sense to people as a framework for good decision-making. We have spoken with a cross section of large regional and community banks, law firms, bankruptcy trustees and receivers. We started work on some consulting assignments relating to the analysis of distressed loans and the feasibility of selling the loans at current market pricing. Our services include identifying qualified buyers for both portfolio and individual note sales. The increasing volume of nonperforming loans in lender portfolios will increase the demand for our services in the coming months.
PBN: Where do you see New Providence Group five years from now?
MILLER: Over the next five years, we plan to build our service and asset recovery business to include clients throughout New England and the entire Northeast Corridor. We are still investment advisers and asset managers at heart, so intend to pursue long-term assignments from fund managers and investors to run property portfolios and advise them on new investments. We will add staff and satellite offices as necessary to support this growth, but the name we selected for the business indicates our intent to remain headquartered in Providence as our service platform grows into a regional platform. Thanks for the opportunity to discuss our new venture.
