Commercial Loan Modification News

commercial property

A commercial loan restructure can reduce the amount of interest paid by a borrower or even lower the remaining principal amount still owed on a loan. A loan restructure is available to both businesses and individuals that own commercial properties such as office buildings, shopping centers, strip-malls, hotels, apartment buildings, industrial complexes, and even some properties still in the construction phase.

Obtaining a loan restructure can be difficult, especially if the loan is what’s known as a commercial mortgage-backed securities loan or CMBS loan.

CMBS are bonds that are sold on Wall Street to investors all around the world. The bonds are used to fund investments on portfolios of commercial loans. The income stream from the property is passed from the property owner to the bond holders.

Many of the problems we are seeing today with CMBS loans are due to the fact that years ago underwriting standards became relaxed as intense lending competition resulted from a race for a diminishing population of qualified borrowers.  Ratings agencies gave CMBS bonds AAA ratings. But the subsequent losses in the CMBS market led to the seizure of that (CMBS) market at the end of 2007.

Once a commercial property goes into default, that CMBS loan is then usually managed by a type of specialist known as a special servicer who represents those bond holders. CMBS loans are often more difficult to modify, as the original issuer of the loan is no longer involved and the beneficiaries are individual and institutional investors that sometimes are located over many states and countries around the world.

Going It Alone

It is difficult for a struggling commercial-property owner to obtain a loan restructure on his own, as most commercial-mortgage borrowers don’t know the proper procedure to present and ask for a restructure.  A commercial property modification for a distressed property involves difficult negotiations, in-depth market research, financial analysis and hours of tedious data collection, discovery, verification and reporting.  Most of this work is alien to the commercial property owners.

Commercial property loans are often times structured as portfolio loans since they are generally not securitized like single family residential loans. This structure makes the actual note holder more readily identifiable and approachable permitting an experienced commercial property loss mitigation professional to be much more effective in negotiating a solution that is beneficial to both parties.

For a commercial loan restructure to be negotiated successfully, the bank or special servicer agrees with the borrower to permanently (or sometimes temporarily) alter the terms of an original note allowing the monthly payment to be reduced. This agreement can be reached  through a series of several strategies including (but not limited to) a straight interest rate reduction, modifying the loan from principle and interest to interest only, a principle reduction, a longer amortization schedule or some combination of these strategies.

Call In the Calvary

There are two crucial factors to make sure that the negotiations for a commercial loan restructure will yield positive results. The first of these is getting the advice of professionals and experts who are very familiar dealing with troubled assets; and the second important factor is being proactive.  By being proactive is meant that the commercial property owner has to have the foresight regarding foreseeable problems in the future—the longer he waits to address a looming bad situation or the longer he waits to get help, the more difficult the situation becomes to handle.

The most important thing an owner of a distress commercial property can do is to be proactive by seeking the help of professionals and experts in the commercial property restructuring industry.

Commercial property loan restructure professionals are familiar with the complexities of a commercial loan modification and knowledgeable in the kinds of information and documents that special servicers and banks require when a property owner applies for a loan restructuring.

The services offered by a commercial restructure consultant would include a go-forward plan to salvage the owners’ investment in the property. Every case is different, and the services offered would depend on the needs of the client.

Possible outcomes for commercial restructure include:

Term extension: This is when the bank agrees to extend the maturity on a loan that cannot be refinanced because of high loan-to-value (LTV), but has cash flow sufficient to service the debt.

Permanent modification: Often, a complex transaction that the bank is reluctant to do as it often reduces the value of the asset on the banks books.

Principal reduction: These are usually only done in relation to a short sale or short refinance where the bank accepts less than the full value to settle the debt. The bank won’t reduce the principal so the property owner can make a profit.

New equity partner: The bank is more likely to work with a borrower that is willing to release equity in the property to a new investor that comes in with cash.

Bankruptcy: Unlike residential property, when an individual is in bankruptcy, the judge can “cram down” or reduce the principal or otherwise modify the terms of the mortgage.

A professional who knows the ropes will minimize the stress for the property owner, but more importantly, certainly improve the chances of success, and speed up the negotiation process.  Commercial loss mitigation experts with a solid track record in executing successful loan workouts are worth their fees, as they more often accomplish their primary objective, which is to avoid the repossession of the commercial property.

Jeramie Concklin

CEO – Alliance Commercial Group

Las Vegas Hotels

SITUATION: This partnership organization owned and managed several secondary tier hotels near the Las Vegas strip. Due to the recent economic downturn, two of the client’s hotels (Major International Hotel Flag), were struggling with the severe devaluations seen not only across the national commercial real estate market, but more specifically across the hospitality sector. Additionally, sales revenues significantly declined as a result of a diminished supply of tourists and recreational travelers in 2009-2010. The hotels’ owners faced increasing cash flow problems due to low market room rates and decreasing occupancy since late 2008.

 Furthermore, the drop in commercial property values in Las Vegas in 2008-2009 made any hopes of securing adequate refinancing unrealistic. To further compound the issues, the principals were obligated by personal guarantees on the notes for each hotel.

Over 2009-2010, the recession yielded a dramatic decrease in tourism and recreational spending—the major driving forces behind revenues in recreational destinations such as Las Vegas. This resulted in the hotels being unable to continue meeting debt service requirements on their mortgages. Consequently, the loans fell into payment default and were tracked toward foreclosure. Within a matter of weeks, the lender had coordinated foreclosure proceedings. The principals who had signed personal guarantees on each of the notes were facing substantial liability.

Contemporaneously with their foreclosure actions, the special servicer also decided to sell the mortgage notes at auction. The borrowers still saw great, long-term potential for these assets and were not prepared to lose them.

WHAT WAS DONE: Guardian Solutions was retained by the hotel’s ownership organization to intervene and secure a solution with the lender through a discounted purchase of the mortgage note. Guardian Solutions was able to negotiate a collective discounted payoff agreement between borrowers and the lender.

Guardian Solutions’ previous dealings with the lender and experience with the auction administrative proceedings provided valuable insight with respect to an acceptable bid level for the auction proceedings. Guardian Solutions was able to correctly advise the clients with respect to the lowest amount necessary to secure possession of their hotels through the closed auction.

This acceptance of a discounted payoff resulted in an end to the foreclosure. The current borrowers were not only able to purchase the notes on both franchised hotels at a significant discount, but they also saved in excess of $3 million on fees, penalties, and the amount recoverable via the personal guarantees.

Shortly after the close of the auction, the owners secured possession of their Las Vegas Hotels. They saved over $3 million, in fees, penalties and personal guarantees. Ownership was now on track to maintain their franchise flags, stabilize their properties, and restore positive cash flows in the years to come. Guardian Solutions’ effective communication, insight and credible relationships with both the lender and auction agents helped the borrower to avoid the liabilities of an over-valued debt level on an under-valued property.

Jamie Sene

By: Carrie Bay

The delinquency rate on loans held in U.S. commercial mortgage-backed securities (CMBS) rose again in January to hit its highest reading in history, despite new issuance and falling spreads, according to Trepp, LLC.

 The New York-based firm closely tracks the CMBS and commercial mortgage market, and it found that the percentage of loans 30 or more days delinquent, in foreclosure, or REO climbed 14 basis points last month to 9.34 percent. According to Trepp, the value of delinquent loans in commercial mortgage bonds now exceeds $61.4 billion.

 “While the rate continues to head higher, optimists can point to the fact that the rate of increase is significantly smaller than it was in the prior two months,” said Manus Clancy, managing director of Trepp. “Pessimists can counter that the jump comes despite the fact that newissues continue to make their way into the calculation and servicers continue to resolve troubled loans.”

 Trepp says new deals – which theoretically should have low delinquencies for a while – will continue to put downward pressure on the rate as issuance continues to grow in 2011. Similarly, the resolution of troubled loans will also help to reduce the rate.

 By Trepp’s calculations, the pace of increase in the CMBS delinquency rate has averaged 25.3 basis points per month over the previous twelve months, after backing out the Stuyvesant Town impact in March and the Extended Stay Hotels impact in October – both of which would have pushed the rates during those months significantly higher.

 Trepp’s report shows that loans for office spaces fared the strongest last month, while industrial and multifamily properties continued to underperform in terms of delinquencies.

 The office sector’s CMBS delinquency rate dropped from 6.93 percent to 6.88 percent last month. Delinquencies within the retail sector also fell, from 7.86 in December to 7.72 percent in January.

 The other three property sectors tracked by Trepp posted increases. The lodging/hotel group edged up from 14.31 percent to 15.08 percent. The industrial sector recorded the biggest increase, jumping from 8.97 percent to 10.12 percent. Multifamily properties still claim the highest delinquency rate at 16.85 percent. That’s up from 16.48 percent in December.

The delinquency rate on loans held in U.S. commercial mortgage-backed securities (CMBS) rose again in January to hit its highest reading in history, despite new issuance and falling spreads, according to Trepp, LLC.

 The New York-based firm closely tracks the CMBS and commercial mortgage market, and it found that the percentage of loans 30 or more days delinquent, in foreclosure, or REO climbed 14 basis points last month to 9.34 percent. According to Trepp, the value of delinquent loans in commercial mortgage bonds now exceeds $61.4 billion.

 “While the rate continues to head higher, optimists can point to the fact that the rate of increase is significantly smaller than it was in the prior two months,” said Manus Clancy, managing director of Trepp. “Pessimists can counter that the jump comes despite the fact that newissues continue to make their way into the calculation and servicers continue to resolve troubled loans.”

 Trepp says new deals – which theoretically should have low delinquencies for a while – will continue to put downward pressure on the rate as issuance continues to grow in 2011. Similarly, the resolution of troubled loans will also help to reduce the rate.

 By Trepp’s calculations, the pace of increase in the CMBS delinquency rate has averaged 25.3 basis points per month over the previous twelve months, after backing out the Stuyvesant Town impact in March and the Extended Stay Hotels impact in October – both of which would have pushed the rates during those months significantly higher.

 Trepp’s report shows that loans for office spaces fared the strongest last month, while industrial and multifamily properties continued to underperform in terms of delinquencies.

 The office sector’s CMBS delinquency rate dropped from 6.93 percent to 6.88 percent last month. Delinquencies within the retail sector also fell, from 7.86 in December to 7.72 percent in January.

 The other three property sectors tracked by Trepp posted increases. The lodging/hotel group edged up from 14.31 percent to 15.08 percent. The industrial sector recorded the biggest increase, jumping from 8.97 percent to 10.12 percent. Multifamily properties still claim the highest delinquency rate at 16.85 percent. That’s up from 16.48 percent in December.

commercial real estate

Today’s borrowers in default or in danger of soon reaching that stage would do well to recognize that the current attitude among special servicers may well be: “What can you do for us?”

While having a CMBS loan transfer to special servicing works to a property owner’s benefit in many ways, special servicers today view the relationship with the borrower as strictly business. Even the trump cards borrowers may have held in times past, such as the threat of filing for bankruptcy, no longer apply, given the terms of the new-generation CMBS loan documents they signed when they obtained the mortgages.

“It would be a mistake for the borrower to come in and make threats. Special servicers have little discretion and authority and worry about being sued by holders of the trust. It is important for the borrower to understand that special servicers have a job to do, and the easiest action for them is moving to foreclosure,” warned attorney Stuart Saft, global real estate chair at Dewey & LeBoeuf.

Volume is not helping. Special servicers now have their work cut out for them. As of June 30, 2010, a full 12 percent of all outstanding CMBS loans were in special servicing, according to Fitch Ratings. This represents $92 billion (5,207 loans). The number of loans transferring to special servicing is “growing exponentially,” reported Fitch, which projects 15 percent of all outstanding CMBS will be in special servicing by year-end 2010.

To determine the best approach to working with their special servicers, commercial property owners need to understand what the specialists’ positions are. Typically, a CMBS loan is transferred from the master servicer, which in normal times services the loan, to the special servicer when one of three triggering events occurs: The loan defaults or is at least 60 days delinquent, the loan is in imminent default or the borrower is in bankruptcy. The special servicer is a specialist in handling defaulted loans, and, unlike the master servicer, has the power to change the loan terms.

The key point for borrowers to keep in mind is that the duty of the special servicer is to the trust that holds the loan and that originally securitized the CMBS. Special servicers are usually appointed by the holders of the lowest-rated tranches of the CMBS, and are governed under the trust’s pooling and servicing agreement, usually to maximize recovery on behalf of all the bondholders based on analyzing alternatives using net present value. “Special servicers will always act in the best interests of their bondholders (CMBS loans) and will pursue any course of action to that end,” said Jeramie Concklin, CEO of Guardian Solutions, a commercial loan restructuring firm that represents commercial property owners nationwide in detailed negotiations with special servicers.

A number of options can be negotiated in the case of a loan in monetary or maturity default—or imminent default—once it has transferred to special servicing. The most favored resolution from the principal’s point of view is often to modify the loan to more favorable terms so as to be able to hang on to the real estate. According to Fitch, the vast majority (77 percent) of loans resolved in the first half of the year were returned to the master servicer.

However, the more desirable outcomes for borrowers compose only a minority of loan resolutions, according to Trepp L.L.C. (see “Frequent Foreclosures” at left). For example, only 27.9 percent of loans in special servicing are modified, whereas almost 55 percent will be resolved via either foreclosure or REO, according to Paul Mancuso, vice president of product management for Trepp.

There are certain approaches commercial property borrowers can take when negotiating with special servicers. “An important point to keep in mind while conducting negotiations with special servicers is to demonstrate that the borrower’s proposal is in alignment with the special servicer’s fiduciary responsibility to the bondholders to maximize the best possible financial outcome for the bondholders,” said Concklin.

Indeed, special servicers will not readily grant whatever resolution the commercial property owners request. “You have to prepare a compelling case for the special servicers to accept. For example, just because you have funds on hand for a discounted buyout of the note does not mean the special servicer will agree to it. The discounted buyout proposal would have to be better than the alternatives he has in his playbook from the bondholder’s perspective,” said Concklin.

Consequently, rather than approaching the special servicer with a simple request, it is important to present a strong business plan, including appraisal. “The special servicers are dealing with so many requests for loan documentation that they will have no time or inclination to come up with a business plan for you,” said Christine McGuinness, partner in the law firm of Schiff Hardin. McGuinness added that borrowers also often need to forego something in return, such as future upside on the property or additional equity paydown, in order to obtain loan modification. “It is very rare that special servicers will just modify the loan,” she said.

It is also critical that commercial property owners examine in advance their exposure under the loan documents and third-party agreements, said Jim Beard, partner in the law firm of DLA Piper L.L.P. The first question to ask in the documents review is whether the borrower or principal executed a repayment guarantee, which makes them liable for repayment of the debt, said Beard. More important, the principal needs to discover what are the carve-outs that are excluded from the non-recourse terms of the loan. The carve-outs that would render principals personally liable for damages and repayment of the entire loan could include filing for bankruptcy or contesting a mortgage foreclosure, said Beard.

Another risk in filing for Chapter 11 bankruptcy protection nowadays is that the special servicer could file a motion to lift the automatic stay on the foreclosure action and change the proceedings to a Chapter 7 liquidation—which accelerates the lender’s ability to foreclose on the property, Saft warned. “The leverage (gained by filing for Chapter 11 today) is very limited,” he noted. Only 5.1 percent of CMBS loans in
special servicing are resolved via bankruptcy, according to Trepp.

On the bright side, lenders are said to prefer to avoid foreclosure if they can help it, since real estate ownership is not their line of business. Also, bondholders of the lowest CMBS tranches, who have the final say, are often reluctant to take the foreclosure route as that may not result in optimal recovery value. The B-piece holders of the loan “are more interested in maximizing the value of the loan so that they do get paid,” affirmed McGuinness. It is difficult for the owner to find out who the Bpiece holders are and their positions, but “you can know pretty quickly if the special servicer has a deal with you, or looks over your business plan,” she noted.

Generally, special servicers appear more likely to take a strategic, long-term view on resolving distressed loans than banks, whose modus operandi may be a clean balance sheet, noted Michael Fay, president of Colliers International, South Florida, which consults for special servicers. And Beard advised that if the principal knows there is no hope for the property, it is better to convince special servicers from the beginning to take back the title through a deed in lieu of foreclosure so that both parties can avoid the troubles of foreclosure.

By Keat Foong

commercial property

There are very few companies that are dedicated to restructuring commercial property mortgages, the primary reason being is that modifying an existing commercial loan is a complicated process. In order for a lender to approve a change in an existing mortgage the lender must be persuaded to see the logic and benefit of restructuring.

While there are numerous companies that facilitate residential loan modifications, only a handful of established firms have the experience and more importantly, the staff to navigate the more difficult waters of commercial real estate.

Therefore, it can be very difficult for commercial property owners, with troublesome properties that would benefit from a commercial loan modification, to locate a company that has the proper manpower and skill to execute loan workouts.

How the Commercial Loan Restructuring Process works
A loan review is the first step for a commercial property owner who is seeking a mortgage modification in order to avoid foreclosure. The goal is to modify the terms of the original agreement to terms that lend themselves to the property owner’s ultimate success with his property venture. This is only accomplished through careful negotiations, meticulous business planning and a comprehensive, precise presentation package. If done correctly, the lender will be persuaded to grant the property owner a reduction of the outstanding balance, lowered interest rates, loan extensions or other modifications.

The sole reason for any lender to grant any of these concessions is so that the property owner can get the business back on its feet and subsequently fulfill the terms of the mortgage, thus allowing the banks “Bad Debt” to return to the “Performing” status.

A note of caution, in order to prepare for negotiations with a lender, the property owner is advised to hire a commercial loan restructuring firm to review the mortgage documents and the financial condition of the business (or property) to determine if a modification is feasible.

This commercial loan review establishes whether the property owner, in cooperation with the commercial loan restructuring firm, will be able to position the property owner’s situation to the lending institution in a way that is viewed positively by the lender.

If the review is favorable, the next step of the process is putting together a comprehensive and cohesive business plan that actually will enable the property owner to get his business back in order while alleviating him of untenable mortgage payments. This step should be strictly be left up to experienced professionals to put together. Usually this process is done by a team comprised of MBA’s, Attorneys and Real Estate Professionals.

Once the property owner and commercial mortgage restructuring firm are in accord on the business plan, the next step is presenting it properly to the lender.

After the property owner’s dilemma and it’s proposed solution has been communicated to the lender (bank), the lender will conduct its own review to pre-qualify the borrower based on his current financial situation, payment record and other factors.

The findings will be used by the bank to decide whether to enter negotiations with the mortgagor’s representatives.

Loss mitigation experts will give advice and act as facilitators or negotiators for the borrower during the process. The best loan restructuring firms typically will do all the work and negotiation while communicating what is happening to the property owner through each step of the process.

As a part of the initial investigatory process done by the hired commercial loan modification firm, an examination of all original documents is done to see if there have been any violations committed by the lender at the time when the mortgage was originally issued. Any violations of federal and local laws designed to protect the borrower’s rights may stop the bank from implementing the provisions of the contract, including foreclosure. The lender may even be penalized, including being forced to return any interest that has been paid by the borrower since the start of the mortgage. Therefore, the results of this commercial loan review could be crucial in convincing the lender and getting the best possible terms.

Conclusion
Commercial loan restructuring is today’s answer for commercial property owners saddled with yesterday’s miscalculations. When faced with the prospect of foreclosure it can, more often than not, be the best solution. But, the process is rigorous, labor intensive and requires people with the tenacity, skill and experience to deal with banks, lawyers and all sorts or real estate professionals. In short, if you are a commercial property owner in the pre-foreclosure stage, or know you are heading into turbulent times, your best bet is to seek out a professional loan restructuring firm a (commercial loan mitigation firm) and find out what they can offer you. While there are costs involved to hire such a firm, typically the benefits of using one far outweigh the costs incurred.

Jamie Sene

Guardian Solution

Last month investment group Paulson & Co., Blackstone Group, and Centerbridge Partners purchased bankrupt hotel corporation Extended Stay Inc. (which operates more than 600 hotels), for $3.93 billion, less than half what previous owner Lightstone Group paid for it at the height of the real estate boom in 2007.

While this is the largest commercial real estate sale so far this year, it happens to be a distressed based transaction. Distressed asset sales are alarmingly becoming more commonplace in today’s economic climate as struggling commercial property owners are forced to sell at a loss.

“Because there’s still an estimated $3.5 trillion of loans outstanding and probably another 12 to 24 more months of rent declines, we can expect a continuation of commercial property defaults nationwide,” says Ira J. Friedman, President of Guardian Solutions, a Florida based commercial loan restructuring firm.

The latest release of the Moody’s/REAL Commercial Property Index showed a notable monthly decline of 3.3% since July suggesting that the nation’s commercial property markets are continuing to slump through a tremendous downturn that has seen prices down some 45.31% since the peak set in October 2007.

Major challenges still lay ahead for commercial real estate, including the uncertainty related to the use of valuations such as cap rates and comps; the manner in which these metrics are employed, directly affect the outcome of proposed sales as well as alternative solutions like loan restructures for distressed properties.

One group of commercial property owners who were able to successfully renegotiate mortgage restructures for two of their hotel properties through Guardian Solutions was AllStar Investments, LLC.

“Guardian Solutions took what appeared to be a hopeless situation for two of our hotels and turned them both around. They negotiated a discounted buy-out of the notes at approximately .60 cents on the dollar,” said an AllStar Representative.

In August 2010 more than one in four commercial property sales involved distressed real estate, according to Moody’s. During that month, U.S. commercial property prices also fell to their lowest level since June 2002, according to the Moody’s/REAL Commercial Property Price Index.

Shrewd investors with substantial cash on hand who can afford to sit out an uncertain market are banking on the economy to rebound and see appreciable gains on their investment down the road. But how long they will have to wait is anyone’s guess.

“In order for these types of buyout deals to work, investors are buying properties at deep discounts from the market highs of previous years; the intent is to turn them into performing assets at today’s market price,” added Friedman. “Some of what you are seeing is investors seizing the opportunity to buy established commercial properties for less than what it would cost to build. It is a potentially faster path to profitability than with a start-up.”

Jamie Sene
VP Marketing
Guardian Solutions

avoid foreclosure

The commercial loan modification “System” can, at times, seem almost rigged against the property owner. It is not. But, like with any sophisticated business dealings, the more familiarity you have with the rules of the game, the more experience you have with the subject matter, the better the odds of winning.

One of the worst situations a commercial real estate owner can find himself in when experiencing the difficulties accompanying a distressed property, is believing that he can restructure a commercial loan personally without any prior experience in this field.

Going it alone on a commercial property restructuring proposal is usually not a very good idea. Especially when you consider that you’ll be dealing with (or against) someone who has lots of experience with properties facing possible foreclosure and with someone who has only “the lender’s interest in mind”. Making your life easier is not part of their agenda.

Just as you would never represent yourself in a court of law if your were facing jail time, should you never represent yourself when facing the prospect of losing your commercial property. The risk of serious loss is very real, but with the added caveat that there is no appeal once you lose your property, as in all likelihood it will be quickly sold off.

Hiring an experienced commercial loan restructuring firm that will very systematically and unemotionally evaluate all the factors surrounding your troubled asset and your individual needs is vital. Engaging a commercial loan modification firm that knows how to come up with workable solutions for your situation and that will aggressively represent you, can mean the difference between losing your property or turning it back into a performing asset again.

Jamie Sene

An explanation of the relationships between a commercial lender, borrower and special servicer. How to get a commercial loan restructured in the current economy.

new commercial real estate economy

The rules for commercial loan restructuring are changing.
Those that don’t learn the ropes will be left behind.

CLEARWATER, FL (August 26, 2010) – As the “new” commercial real estate economy continues to trudge forward on its hopeful path to recovery, proof of a new way of doing business is evidenced by reports which show that the total workout activity (loan modification) for distressed commercial real estate loans during the first half of 2010 reached $29.2 billion. That is an increase of $14 billion of restructuring activity over the $15.2 billion for the first half 2009.

Ira J. Friedman, Chief Operating Officer for Guardian Solutions, a commercial loan modification firm based in Florida, said “What we are seeing on the part of lenders and special servicers is an increased openness to address the restructuring of CMBS loans when presented with professionally crafted proposals. Due to the ongoing deterioration of the market, and because of our regular dealings with lenders and special servicers, we are now more able to quickly move through the process of commercial loan restructuring.”

The continued stabilization of the real estate market has become increasingly dependent on the re-pricing and deleveraging of property positions, the Real Estate Research Corporation (RERC) reported recently.

Broader issues such as limited gross domestic product growth, continued high unemployment rates, and the likelihood of new federal regulations will force the market to further evaluate the long-standing formulas and assumptions they have traditionally used to price commercial real estate. The special servicers, who handle (CMBS) commercial properties in or facing default, have similarly, had to reevaluate their usual way of transacting with distressed properties that come into their hands.

Major challenges lay ahead for commercial real estate, including the uncertainty related to the use of valuations such as cap rates and comps; the manner in which these metrics are employed, directly affect the outcome of proposed commercial loan restructures and subsequently will influence a market recovery.

“The types of mortgage restructuring we are seeing get approved include both term extensions and mortgage discounted buyouts, added Friedman…while we obviously take into account the needs of the property owner, we clearly address the concerns of the special servicers in order to get these deals completed—it has to be a win-win result..”

Because of the changing landscape of commercial real estate and other factors that have evolved in the capital markets over the past several years, the approach to analyzing, investing, managing and restructuring loans for commercial properties will also need to evolve beyond the status quo of previous years.

For commercial loans from 2006-2008, the lax underwriting standards of that time period, lack of amortization, low capitalization rates, the disastrous domino effect of the weakened economy and reduced market liquidity will all probably to lead to higher loss severities.

The commercial loan modification process is very selective, with some banks, lenders and special servicers electing to take back properties, sell them at a loss and take them off their balance sheets. But other properties which meet the new criteria for loan restructuring, and are represented with the submission of compelling workout proposals, will be modified and kept on the books.

“Property owners are increasingly experiencing the fallout of this damaged economy and are faced with two options: holding onto a non-performing asset or foreclosure. Guardian Solutions is able help commercial property owners restructure their loans by first properly evaluating an owner’s asset performance and market potential. Based on that information and other analytical data we compile, and our first-hand experience getting these modifications completed, we create a comprehensive restructuring proposal,” concluded Mr. Ira J. Friedman.

About Guardian Solutions
Guardian Solutions is the one of nation’s largest commercial loan restructuring companies and is committed to helping commercial property owners save their properties. The company’s knowledgeable mitigators are experienced in a variety of disciplines to provide customized restructuring solutions. For more information, visit www.GuardianSolutions.org

Contact:
Jamie Sene
Vice President, Marketing
Guardian Solutions
727-442-8833
jvs@guardiansolutions.org
www.GuardianSolutions.org