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Distressed Debt Investing

Jimmy Tate & Sergio Rok
Jimmy Tate (left) and Sergio Rok bought the debt to the shuttered Omni Mall (background), then resold it to Genting. [Photo: Bill Wisser]

Plummeting property values and lower revenue from tenants have left many commercial property owners behind on their mortgages. Some have simply stopped paying. Eager to get distressed debt off their books, banks have been selling it to investors at a discount. One of the largest buyers of distressed debt in south Florida is the partnership of Sergio Rok and Jimmy Tate. Rok, president of real estate developer Rok Enterprises and former owner of TransAtlantic Bank, and Tate, president of Tate Capital, have closed 12 deals for distressed debt in Miami, around the southeast U.S. and as far away as Arizona during the past two years, acquiring a debt portfolio valued at more than $500 million. Their aim is either to get the delinquent owner to pay up, restructure the debt or take ownership of the property and manage it.

Florida Trend: What has been key to your success in winning and closing deals?

Jimmy Tate: We have the reputation and the history to support why we should get the deal. What most companies require 60 to 80 days to accomplish (in due diligence and financing), we can do within 30.

Sergio Rok: The banks want to get (these loans) off their books. They don't want to go into a deal and not have it close.

Trend: Is there a bit of a frenzy right now for distressed notes in south Florida?

Rok: There's certainly a little more competition out there. Some of these prices, we don't see the values. I don't know how some of the companies are valuing what they're buying.

Tate: We're seeing prices driven way beyond prices we're comfortable with right now.

Trend: Is the local real estate market headed for another boom/crash?

Tate: There's a strange current in the market right now with Genting making a splash in the marketplace of the magnitude they've done. You have, I hate to say, a false sense of security.

Rok: I believe the lack of credit alone is going to make having a boom unsustainable. The lack of credit is going to limit the amount of new construction.

"You have a lot of people playing the speculation game again."

— Jimmy Tate