Commercial Loan Modification News

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

The commercial real estate market faces a dismal forecast for the next several years. Nationally, 2010 looks like an unstoppable cataclysm of foreclosures and short sales for a great number of borrowers, investors, and lenders.

Although the U.S. economy appears to be showing preliminary signs of recovery with the stabilization of some large financial institutions, the commercial real estate market continues to be negatively affected by the ongoing decline of home prices, the high rate of commercial loan defaults and an unmoving high unemployment rate. Treasury Secretary Timothy Geithner recently darkened this scenario by warning that “…unemployment could continue to rise before subsiding”.

Jeramie P. Concklin, CEO of Guardian Solutions, a commercial loan restructuring firm based in Florida had this to say, “The rate of growth of delinquencies in commercial mortgage-backed securities (CMBS) real estate loans did show some slight signs of moderating in July, but despite that, we are still seeing very high numbers of new distressed commercial mortgages in need of restructuring every week as evidenced by CMBS delinquencies surpassing 60 billion dollars, an increase of 3.11 billion from just the month prior.”

A bright spot in this gloomy scenario is surfacing due to the efforts of independent commercial loan restructuring firms such as Guardian Solutions. According to Trepp, a leading provider of CMBS and commercial mortgage data and analytics, a recent trend has emerged that is having a positive effect on CMBS loans due to the increase in loan modifications by lenders. Loan modifications through July of this year already have surpassed those for all of 2008 and 2009 combined. “Loan modifications (have) accelerated dramatically in 2010,” the Trepp report said. “This puts downward pressure on the delinquency number, as troubled loans get resolved and move from the delinquency category.

“Based on the successful commercial loan workout results we’ve been getting for our clients, I can see that the biggest mistake that property owners tend to make is to do delay addressing the issue at the first sign of trouble, or even worse, to try to deal with lenders or special servicers on their own. But that being said, commercial property owners should know that they can take steps to improve their situation by seeking professional help and guidance while the situation is still salvageable; the longer they wait to act, the more difficult their situation becomes,” added Concklin.

Commercial property owners who are trying to keep their properties viable are seeking help from firms like Guardian Solutions that specialize exclusively in commercial loan modification. Currently, there are only a handful of specialized firms that hire highly qualified employees, such as accountants, MBAs and real estate professionals to deal specifically with the complexities involved in a restructuring a securitized commercial property.

“Guardian Solutions helps commercial real estate owners in distress every day,” said Concklin. “We are saving all types of commercial properties facing default. But the sooner we get into negotiations, the more options we have available to help. A restructuring plan that’s put in place early on usually contains the most favorable terms and achieves the best results. With the dismal forecasts we have for the economy and for the commercial real estate market, it’s the wise property owners who are taking a look at their assets and preparing now for the eventual market declines.”

The technical and legal aspects involved with securing a commercial loan restructure prompts many property owners to ignore their position and grudgingly accept foreclosure rather than save their investment. This can result in more than just losing the property, it can severely damage the borrower’s credit and even lead to personal bankruptcy.

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
www.GuardianSolutions.org

The problems facing commercial real estate have no single cause. The loans most likely to fail were made at the height of the real estate bubble when commercial real estate values had been driven above sustainable levels and loans; many were made carelessly in a rush for profit. Other loans were potentially sound when made but the severe recession has translated into fewer retail customers, less frequent vacations, decreased demand for office space, and a weaker apartment market, all increasing the likelihood of default on commercial real estate loans. Even borrowers who own profitable properties may be unable to refinance their loans as they face tightened underwriting standards, increased demands for additional investment by borrowers, and restricted credit.

Guardian Solutions has successfully established working relationships with various loan servicers and our experts are experienced in negotiating positive workout solutions on behalf of our clients. Our experts are familiar with the various tactics used by lenders and servicers and know how to handle any difficulties that arise during the negotiation process. Our experts work with determination to obtain the most advantageous workout agreement in an efficient time frame for our clients.

Guardian Solutions is staffed with experienced commercial loan modification professionals who have your best interests in mind. Our goal is to assist commercial property owners in saving their investment.

Using an independent loan restructuring firm that is appropriately staffed with skilled and proactive professionals is what commercial property owners in distress need right now. A focused commercial loan restructuring company can ease the entire process by doing all the work—the due diligence, business plan and negotiations for the property owner.

Once fully prepared with every piece of relevant information and a realistic business plan, Guardian Solutions’ staff enters into negotiations with the lender to secure the best possible terms for the client, while addressing the concerns of the lending institutions. It is important to understand that what we are dealing with here is an overwhelmed banking system. Our firm excels at providing the lenders the specific information they need in order to make a timely, realistic decision.

Jeramie P. Concklin – CEO Guardian Solutions – 877-390-6458

Commercial real estate is expected to remain a drag on the U.S. economy through 2010 and beyond.

The Urban Land Institute, a research center, said in an emerging trends report this month with consultant PricewaterhouseCoopers that respondents to its survey predicted that “commercial real estate vacancies will continue to increase and rents will decrease across all property sectors before the market hits bottom in 2010 and projects value declines of 40 percent to 50 percent off 2007 market peaks.

However, some savvy commercial real estate investors that are unwilling to lose their holdings are taking a proactive approach to avoid foreclosure and protect their assets against further financial decline.

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 mediators are experienced in a variety of disciplines to provide customized restructuring solutions. For more information, visit www.GuardianSolutions.org

Jeramie P. Concklin – CEO Guardian Solutions – 877-390-6458

Guardian Solutions can and will help commercial real estate owners in distress. But the sooner a borrower comes to us, the more options they have. While it’s never too late to avoid foreclosure, a plan that’s put in place at the first sign of trouble usually contains the most beneficial terms and achieves the greatest results. With the dismal forecasts for commercial properties, wise property owners are taking a look at their assets and preparing now for the eventual market declines.

Jeramie P. Concklin – CEO Guardian Solutions – 877-390-6458

The technical and legal aspects involved with securing a commercial loan restructure prompts many property owners to ignore their position and accept foreclosure rather than save their investment. This can result in losing the property, severely damaging the borrower’s credit and even personal bankruptcy.

However, commercial loan restructuring companies, such as Guardian Solutions, can help stressed property owners navigate the complex procedures, negotiations and nuances associated with a successful loan restructure program.

Jeramie Concklin – CEO Guardian Solutions – 877-390-6458

Commercial loan restructuring involves executing a plan to help property owners avoid default and ultimately turning their non-performing property asset into a performing property asset. One aspect of restructuring includes permanently modifying the original mortgage to include terms more favorable to borrowers such as extending the length of the loan, a reduced interest rate, lower mortgage payments, interest only payments for a specified period and/or delayed payment of past due amount to the end of the term.

Jeramie Concklin CEO – Guardian Solutions – 877-390-6458

As more commercial real estate property owners see tenants go bankrupt, downsize or invoke escape clauses, they continue to feel the serious effects of the economy. The national vacancy rate is expected to reach 19 percent by the end of 2010, the highest recorded since 1986. Without paying tenets, commercial property owners have little cash flow to make impending balloon loan payments and may face foreclosure.

Jeramie P. Concklin, CEO – Guardian Solutions – 877-390-6458