Are you a lender with distressed assets?
A developer looking for a creative solution for a stagnant property?
A community exploring economic development programming?

Perry Group Ltd., Advisory Services provides customized programs for extraction of value.
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Advisory Service                                                                                                                           

30 years ago not many people knew what a TIF, an Enterprise Zone or a Section 42 Tax Credit was. Commercial real estate was a fairly fundamental enterprise. In fact, prior to the Tax Reform Act of 1986, commercial real estate’s engine was fueled in large part by syndications that provided great tax shelters for passive investors.

The early 1980’s challenged the industry with obscenely high interest rates, the highest unemployment rates since the Great Depression and generally static growth patterns. Liberal lending practices by the savings & loan industry helped fuel the market challenges with easy capital and poor (or deliberately misleading) underwriting for commercial real estate developments.

Federal rehabilitative programs such the Resolution Trust Corp., which was created to realign distressed properties, localized creative economic development programs (TIFs, Enterprise Zones), and more aggressive debt programs such as tax exempt bonds, along with a de-acceleration or new developments and reasonable expansion of demographics helped right the ship over time and by the late1980’s developers were aggressively expanding and creating new product.

Fast forward to late 2008. Lenders had been competing for placement of debt, which led to more liberal underwriting and a pace of development that exceeded market demands. Land values, lease rates, CAP rates and inventory all reached record levels and acorrection became imminent.

Before the end of the first month of 2009, we are seeing well respected developers close their doors, foreclosures soar, formerly attractive retailers file bankruptcy, and even the remaining strong credit tenants simply cease expansion. Formerly formidable banks become insolvent. Federal programs with acronyms like TARP are created to reposition real estate, or more specifically, the debt that financed the real estate. Municipalities are considering creative economic development tools and the federal government is describing rescue plans that approach $10 trillion. Fear further fuels the strife and the commercial real estate development community not so fondly recalls 1980.

In 1980, what is now the Perry Group had a front row seat to the debacle and our founder, Tony Perry, had the vision to move from the traditional development model to creative economic development practices. Back then, while Tony struggled (and succeeded) in repaying his banks back the millions he owed on then stalled commercial developments, he began to understand the challenges that banks, municipalities, developers and other ancillary industries would need help navigating through these foreign programs and because of this keen understanding, he became one of the preeminent economic developers in the Chicago region. Since then his firm (which is now operated by his son, Joe), created several Tax Increment Financing Districts that were the impetus for hundreds of millions of dollars in new investment, tens of millions of dollars in increment to local taxing bodies, nearly 1,000 affordable rental housing units, many millions of square feet in new commercial real estate and many challenging bank workout resolutions.

With “ordinary” real estate activities, we are as good as anyone in the field.
We excel when we can add value by doing the extraordinary or unusual.

In 2009 Perry Group. Ltd. relies on this pedigree to provide expert creative solutions for these same challenges that we faced 30 years ago. With a tremendous national network, an intense knowledge of esoteric creative programs, and an acute understanding of marketdynamics and their impact on the re-underwriting of challenged or distressed properties, Perry Group, Ltd. can help extraction occur more rapidly and with minimal stress. Its marketing and leasing division can provide national exposure to properties with excellent reporting to its clients. As developers, Perry Group, Ltd. can guide projects through cumbersome processes from entitlement through Certificate of Occupancy.

Commercial real estate is essentially an objective business.
As professionals with a deep understanding of market dynamics,
we provide expertise with limited subjectivity.

Workout-Repositioning Case Studies                                                                                            

Project 1:       REO Industrial Facility, South Chicago Suburbs
Perry was engaged by the court appointed Receiver for disposition of a 120,000 square foot industrial facility situated on 10 acres. The foreclosed borrower, a steel fabrication company, had carved out the 10 acre subject property from a larger tract, retained theremaining land, which was not part of the foreclosure, and had also brought railroad service from the main line, through the unaffected land and into the building.

Within 90 days of assignment, Perry identified a buyer for the property at a price that would satisfy all outstanding debt, including default interest, penalties and receivership costs. The challenge was uncovered upon completion of the ALTA survey and title commitment process when it was in fact determined that there was no easement that would allow for rail service from the main line, through the foreclosed borrower’s land and into the subject property. The new buyer required rail service and the purchase was expressly contingent upon the seller’s ability to provide the service.

The foreclosed borrower demanded $250,000 for the easement. The local municipality had previously lent the foreclosed borrower approximately $350,000 to complete necessary off-site improvements, which in fact had never been completed but would add value to the property. This loan was also in default but no formal process had commenced as the municipality determined that it was unlikely that there would be enough remaining cash to satisfy their subordinated loan.

Perry urged the municipality to proceed with foreclosure on their note as leverage on the borrower, then the municipality, through Perry, negotiated a settlement with the borrower where the borrower would provide a permanent easement for the rail spur in exchange for a release of the personal guarantee that had been provided to the municipality for the loan.

Perry then went to the State of Illinois Department of Commerce and secured a grant for the municipality to construct the necessary offsite improvements that had never been completed. The grant was predicated upon the employment created by the new company.

This process, which consumed approximately 150 days, allowed the lender to recapture all of its outstanding debt, including penalties, costs and fees; the municipality to pay for necessary off-site infrastructure with grant funds; and a large employer acquire an ideal facility at a reasonable price.

Project 4:       Large Plant Closing and Repositioning, South Suburban Chicago
A large manufacturer announces its immediate closing of its 1 million square foot facility. Due to then-current economic conditions and the functional obsolescence of a large portion of the property, there is no reasonable market for the disposition of the property. Perry engages the owner, a large publicly traded corporation, to donate the property to a newly created 501c3 organization, which is managed by Perry. The corporation also agrees to donate $200,000 to the newly created not-for-profit organization to seed the rehabilitation. Now with ownership of the property through the not-for-profit, Perry secures a $2 million grant from the United States Economic Development Agency for necessary renovations. This allows leasing of incubator space to small manufacturers, which in turn creates revenue necessary to secure conventional financing.

During comprehensive rehabilitation, a contractor accidentally causes a devastating fire which destroys approximately 30% of the buildings. Perry secures another $1 million grant from the State of Illinois to clean up the property and continue rehabilitation.

Perry identifies a large manufacturer that can occupy a large portion of the vacant space and employ several hundred local residents. In order to get this manufacturer to commit to the space, an additional $500,000 must be invested into the space. Perry secures a Community Development Block Grant to the municipality, which in turn loans the money to the manufacturer at 1% rate. Incidentally, the repayment of that loan to the municipality creates a Revolving Loan Fund, which then is used to attract other manufacturers to the community.

Perry managed this not-for-profit from its creation for nearly 20 years, at which time Tony Perry, the architect of this entire process, retired from that position to spend more time on external community and economic development activities. This project, whose genesis was a derelict, donated property, represented a total investment of over $6 million and the creation of approximately 400 jobs.

Project 3:       Large Residential Development Property – Note Acquisition
A large Chicago based lender engaged Perry to advise them on a large residential property in the Chicago South Suburbs. Upon receipt of the analysis by Perry, the lender asked if Perry could identify a local developer who would have interest in acquiring the note at face value. The developer would have an opportunity to perfect and complete the foreclosure and acquire the property at wholesale value which could allow liberal profits on its development. Alternatively, the borrower would pay off the loan and the developer would profit from the default interest, penalties and fees accrued. Perry identified a developer who acquired the note and completed the foreclosure process. This process from initial engagement to sale of the note to the developer, took approximately 45 days.

Project 2:       Affordable Senior Housing Redevelopment
A Chicago area community had a concern over a one-block area within its central business district which had several blighted and abandoned properties locate within it. Several of the properties had been sold for taxes, some of those were held by the tax buyer and some had gone back to the municipality following the tax buyer’s default on additional taxes. Three of the properties were privately owned and two of those were viable businesses.

The municipality engaged Perry to re-develop the entire block and create affordable senior housing for its residents.

Perry negotiated with the 11 owners of the various properties, which included a local business owner who did not necessarily want to relocate his business; a benevolent organization which operated its lodge/clubhouse on the site, several tax purchasers and even one unaware descendant of an Estate Trustee who had himself died before the estate could be closed and the subject property could be transferred out of the estate.

Perry then secured a Reservation of IRS Section 42 Tax Credits which were sold to create approximately $5 million in syndicated equity for the development as well as a $2 million loan from the AFL/CIO with a federal guarantee; another $2 million loan from the Cook County Department of Planning; a $750,000 loan from the Illinois Housing Development Authority, a $500,000 grant from the State of Illinois; and $1 million in developer equity. Perry also negotiated a Re-Development Agreement through the Tax Increment Financing District which provided a rebate of real estate taxes for several years and which was monetized through another conventional loan.

This process, from initial consultation with the municipality to construction completion, took approximately 4 years and ultimately led to a new $13 million development which replaced 11 derelict and/or abandoned properties; created affordable housing opportunities for over 150 local senior citizen residents; and tax increment for municipality.


Marketing-Sales & Leasing                                                                                                           

Commercial real estate is an extremely specialized discipline and requires a qualified advisor who not only participates in the market, but also understands the dynamics behind decisions made on where to locate or expand business.

Since 1962, Perry Group, Ltd. has focused on commercial and industrial real estate throughout the suburban Chicagoland area. We exclusively self develop as well as represent other commercial property owner’s motives and spend every day participating in the marketplace where decisions get made and commercial space gets leased and sold.

Having developed over 1 million square feet of specialized commercial properties in the greater Chicagoland area allows a legitimate and keen understanding of market dynamics that effect the feasibility of proposed developments.

Success is predicated upon an intense knowledge of the marketplace, specialized training and access to a vast network of buyers, sellers, tenants, landlords, investors, developers and other participants in this narrow field. Associations like the Society of Industrial and Office Realtors, whose membership is limited to only 1,800 qualified practitioners internationally and less than 110 in the State of Illinois, provide essential tools for successful commercial real estate transactions. Membership in this particular group is limited to practitioners with the experience, level of sales, continuing education requirements and strict ethical standards. The average real estate professional cannot just join these organizations.

Market experience is evidenced through the following recent activities:

• Over $150 million in various commercial-industrial transactions in the marketplace in 2007/08.
• Sale or lease of over 1.5 million square feet of commercial-industrial space and 1,800 acres within the marketplace in 2007/08.

The optimum marketing program for the subject property would consist of a combination of several elements. Each component of the program is somewhat dependent upon the others for maximum exposure, effectiveness and impact. The success of the program is predicted upon our ability to adjust and respond to the impact of each segment of the program and the interest generated by such efforts.

It is recommended that a review and analysis occur every thirty (30) days. This kind of frequent monitoring means that if a particular media proves highly successful, we can increase our use of it. Conversely, if we find a media does not sufficiently generate the response we are seeking, we can adjust our approach.

In order to assure our ability to respond to the impact of each element of the program, we need to maintain some degree of fluidity and flexibility in how we use each medium. Provided, herein is an overview of a recommended approach. Again, the caveat is that elements may be eliminated or their use increased contingent on their effectiveness, as the program proceeds.

Program Components:

Electronic Direct Mail Campaign:
The sending of information to individuals at targeted companies which will be accomplished by the use of our in-house marketing processes and use of proprietary mailing lists which have been developed through years of canvassing and relationships.

It is recommended that a full color PDF brochure of the property be used. Recipients will include likely prospects as well as the brokerage community servicing that particular sector.

Commercial-industrial real estate is a brokerage-oriented marketplace and it is important to solicit assistance from all area brokers. The brokerage community will be advised of the property’s availability and will be provided with promotional material to share with their prospects. Those who concentrate in this market area will also receive phone calls to remind them of the property’s availability. Along with this canvassing activity immediate emphasis will be put on solicitation of ideal users. Special presentations will be developed for these users providing necessary trade area details.

The property will be featured on Loopnet, a highly specialized commercial-industrial electronic network and database that provides national exposure. Additionally, we subscribe to Retail Lease Trac, an online database of national retailers who are actively seeking new locations.

Networking:
Perry Group, Ltd. feels it is essential to be identified with, and knowledgeable of commercial and industrial Associations and chooses to be active with a high profile in each of them. The results of the involvement with these groups has been extremely rewarding to the program. Active memberships include:

• SIOR, Society of Industrial and Office Realtors
• CCIM, Certified Commercial Investment Members
• AIRE, Association of Industrial Real Estate Brokers
• NICAR, Northern Illinois Commercial Association of Realtors
• REC, Real Estate Consortium
• CORENET, National Association of Corporate Real Estate Executives
• NAR, National Association of Realtors
• IAR, Illinois Association of Realtors
• RNMI, Realtor’s National Marketing Institute
• IDRC, Industrial Development Research Council
• ICSC, International Council of Shopping Centers

The International Council of Shopping Centers is the global trade association of the shopping center industry. Our marketing team develops extensive materials for distribution and presentation to prospects through this Association. Perry Group, Ltd. has recently successfully sited the following national retail tenants.

Signage:
On-site marketing would include 4’ x 8’ signage clearly identifying the property and reflecting the marketing concept.

Other Initiatives:
Running parallel to and supported by the other marketing elements would be a targeted sales effort. This systematic campaign would include a formal for initiating and following-up on those key prospects selected from previously targeted audiences. Individual marketing letters and interviews, together with a monitoring program to “log” and follow leads generated, ensure necessary controls and information for decision-making. This system of aggressive lead seeking, followed up by creative negotiating, will generate the volume of users necessary to sell your property.

Perry Group, Ltd. enjoys a strong working relationship with the Illinois Department of Commerce and Community Opportunity (DCEO), which is a formal clearinghouse for commercial prospects considering expansion in Illinois. All resources available at DCEO will be incorporated into the marketing strategy for the subject property.

Inspections – All of the prospects to which the property is being shown will be accompanied by one of our marketing team members.

Registrations – All prospects for the property, whether developed by our office or others would be registered within our master registration system for the protection of all concerned.

Follow-up – once a prospect has been identified, regardless of the source, one or more of us will conduct personal follow-up until the transaction is concluded. Negotiations will be in writing to eliminate misunderstandings, and every effort will be made to have all offers accompanied by an earnest money deposit. This gives you assurance that a buyer has been qualified and is committed.

Reporting – At various intervals, written reports will be submitted to you covering all activity on the property to date. Current prospects will be listed and their status identified.

Special Effort – In the course of marketing the property, we are often called upon to provide that extra ingredient to produce a transaction. There may be other areas of legitimate concern expressed by a prospect (i.e., zoning, utilities, construction costs, financing, local attitudes, etc.). Whatever that ingredient may be, you can be assured that we will make every effort to close the transaction.

Qualifications
Perry Group, Ltd. is an exclusive commercial-industrial real estate specialist with over 70 years of aggregate experience. Commercial-Industrial real estate is an extremely specialized discipline. Success is predicated upon an intense knowledge of the marketplace, specialized training and access to a vast network of buyers, sellers, tenants, landlords, investors, developers and other participants in this narrow field. Associations like the Society of Industrial and Office Realtors, whose membership is limited to only 1,800 qualified practitioners internationally and less than 110 in the State of Illinois, provide essential tools for successful commercial real estate transactions. Membership in this particular group is limited to practitioners with the experience, level of sales, continuing education requirements and strict ethical standards. The average real estate professional cannot just join these organizations. Two principals of Perry Group Ltd. are active members of this valuable Association with one currently serves on the Illinois Chapter Board of Directors.

References and Client List:
Perry Group, Ltd. has provided professional services to the following corporate/institutional entities:

Asset and Property Management Services                                                                                    

Perry Group, Ltd. has a full-service management division with 4 full-time asset and property managers and 6 localized part-time managers. Currently the firm manages over 350,000 square feet of retail, office and industrial space; over 500 apartment units (350 of which require annual IRS certification). The geographical region of assets currently managed ranges from the far North-West border of Illinois (Galena, IL) to the St. Louis Metropolitan area.

The firm has the most modern accounting software systems and can provide solutions ranging from simple on-site management and maintenance services to full accounting services. We use a local Certified Public Accounting firm for most required services, however, for larger and more complicated projects, the firm works with Virchow-Krause & Company, the 17th largest public accounting firm in the U.S.

Perry can customize a management program for any property that can help relieve the burden of short-term ownership/stewardship of a property.


Principals and Staff                                                                                                                       

The principals of Perry Group, Ltd. Advisory Services have unparalleled experience in the Chicago region and include:

Tony Perry remains active in the community and economic development arena has grown to be a true legend in the industry. His national network of valuable contacts and his participation in various professional trade organizations - many times in leadership roles - has helped define what the Perry Group, Ltd. is today. With his achievements and accolades, from several lifetime achievement awards to induction into the Illinois Senior Citizen Hall of Fame, Tony is our counsel-emeritus. Tony is a longtime CCIM and SIOR.

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Joe Perry, President and CEO, started as a salesman in the firm in 1988 after working for a commercial general contractor following college. Joe learned the commercial real estate business literally from the "ground up". In 1994 Joe started an affiliate company, J.M. Perry Development Corp., which developed commercial and industrial build-to-suits as well as market-rate multi and single family residential subdivisions. This led to a very specialized segment of the multi-family development business with the advent of the use of Federal Tax Credits to develop affordable senior housing developments around the Midwest. Since the first project in 1995, this entity has developed nearly $70 million in affordable senior housing projects and remains a leader in the market today.

During this time, Joe maintained a real estate license and continued to perform brokerage services. In 2000, Joe purchased the real estate brokerage firm from his father and, merging the company with his development firm, renamed the new entity Perry Group, Ltd., and expanded from approximately $15 million in annual sales in 1999 to over $120 million in 2007.

Joe was inducted into the University of Illinois at Chicago Entrepreneurship Hall of Fame in 2004. The Entrepreneurship Hall of Fame, the oldest and most prestigious program honoring Chicago-area entrepreneurs.

Additionally, Joe serves as the founder and President of the Illinois Regional Development Alliance, a regional economic development association; a member of the Board of Directors of the Real Estate Investment Association, the Legislative Liaison and Committee Chair for the Chicago Chapter of the Society of Industrial and Office Realtors; a charter member of the Board of Directors of the Illinois Housing Council, an organization focusing on Section 42 Housing Tax Credits; and a member of the Board of Directors and Loan
Committee member for an Illinois based FDIC insured community bank.

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Michael Smith, Vice President of Development and Advisory Services was appointed to the Commuter Rail Board (Metra) in 2003 by the chairmen of the Kane, Lake, McHenry and Will county boards. Mike, a resident of Chicago, and prior to that, New Lenox for more than 30 years, served as the Village of New Lenox Mayor from 1999 until April 2007. During his tenure as Village Mayor, he focused on commercial and industrial development to enhance the economic viability of the community. Efforts led by Mike as Mayor led to nearly $1 billion in commercial and industrial economic developments within the community.

Mike was appointed to the Commuter Rail Board (Metra) in 2003 by the chairmen of the Kane, Lake, McHenry and Will county boards. He was also elected to the Northeastern Illinois Planning Commission, now the Chicago Metropolitan Agency for Planning (CMAP), by the Council of Mayors in 1999 and served as NIPC president from 2002-2006, as chairman of the group’s legislative committee, and as Vice-Chairman of CMAP.

After leaving public office he served as Vice President of Commercial Development for ZCorp Services a building, construction management and consulting firm based in Romeoville and Chicago.

Additionally, Mike has served on the Steering Committee for S.A.F.E. (Southern Alliance for the Extension of I-355), as Vice-Chairman of the Legislative Committee for the Illinois Municipal League, as President from 2003-2007 of the Will County Governmental League and on the Transportation Committee for the transition team for Governor Rod Blagojevich. He belongs to several organizations including the Masons, the Rotary, Veterans of Foreign Wars, the New Lenox Township Republican Organization, Metro Mayors
Caucus, New Lenox Chamber of Commerce, Chicago Southland Chamber of Commerce, the United Way of Will County and the Rainbow Council for the Boy Scouts of America.

Mike is a Vietnam era veteran having served in the United States Marine Corps as a helicopter crew chief. He attended Pepperdine University and Moraine Valley Community College studying business administration. He then attended Purdue University, where he studied agronomy. He was the owner of the Willow Run Golf Course until January 2003 when he chose to liquidate his ownership in order to devote more time to public service.

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Paul DiBenedetto is Vice President of Sales for Perry Group, Ltd. and has several years experience in the real estate market in the Lincoln-Way marketplace. Paul represents several Chicago area developers with sales and leasing on behalf of the firm with over 500,000 square feet of commercial inventory and is a member of the International Council of Shopping Centers and the Real Estate Investors Association.

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Additionally, Perry Group, Ltd. employs another 6 full time commercial real estate marketing specialists, 2 administrative assistants, 1 senior property manager, 7 property managers, 1 comptroller and 2 maintenance personnel. Offices are located in Chicago and South Suburban Frankfort as well as Bradley, IL.