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Our advisory services for distressed commercial loans contain several phases and attempts to find amicable and beneficial solutions for all concerned parties. Following is a brief summary of our process.
- Case Evaluation
- Property and market studies
- Solutions
- Negotiations
- Closings
- Dispositions
Case Evaluations:
All real estates are not only locals but also case locals. Unlike the profit and earning ratio of the stock market i.e. one cap fits all, the real estate capital rate stands on its own. If you remember the time you purchased your property, you will recognize that there were multitudes of factors affecting the property and its value. Most of them are not within your control. Times do change these factors. When you have a distressed property, it needs a thorough check up from its current use, income, zoning, and local market, general and local economy to all its potentialities in the future. Your current financials, future plans, social and even familial circumstances need to be examined within aforesaid constraints.Lender limitations also play a part in your strategy. You will not find the best possible solution of the troubled loan without a comprehensive study of the situation at hand.
Property and Market Studies:
Specific property evaluation is very essential as lenders will be paying most attention to the factors affecting your property. Your personal concerns are not important to them except your ability to pay should the property fail. Local market affects the property value as a general factor and you have little control over it. However, the same local market can be used differently should your property justify it. Different usage, customers, zonal conditions, conditional use permits, governmental regulations, impending neighborhood changes and many other factors can change the perspective of the parties concerned. Without the benefit of the knowledge of these factors, one cannot get the best value out of the property.Loan Documents:
Most loan documents are boiler plates prepared to favor the lenders. They essentially contain two implications. One is financial obligations and the second one is legal implications. Financial obligations many times contain personal guarantees-financial and performance, limitations on your financial activities, cross collateralization and other impediments. Guarantees are worthless if the lender cannot collect. Alternate solutions may offer better choices for the lender. Legal obligations must be examined by the attorneys specializing in lender related issues. Just remember that loan documents are very important but not the final word. There are unstated lender obligations and general laws such as bad faith dealings, laws of equitable issues and lender promises that can make a difference.Solutions:
The solution must fit the property, lender and the property owner. Each party must have gained something to lose something. The comprehensive review of the entire situation produces a solution that benefits all parties concerned. The case for the restructure of the loan or the disposition of the loan is made. Sometimes the financial viability of a borrower or even a lender is also an issue. Promised future performance must be assured as both parties are coming out of stressful situations. One solution does not fit every case even if the parties are the same.Closings:
Solutions must be transferred to proper documentation. Agreements of loan modifications, forbearance, waivers, and guarantees must be handled with due care as even small verbatim can reopen the closed issue. All parties need to stay alert until the last document is signed off and delivered.Dispositions:
If the lender or the property owner finds it necessary to dispose of the asset, we can help in finding the right purchaser or even a partner for your asset. It is always better to find a buyer before the filings of bankruptcy or the notice of default. In either case, the market perception of the value of the asset drops by 30% or more.
If you are already in receivership, be you a lender or a property owner, we can bring in fresh blood in the form of a new manager, buyer or capital to quickly resolve the distressed situation. Bankruptcy judges and trustees also look more favorably on new faces and capital to work out a solution of the problem.
