A Frequent Scenario in Today’s Market!
As a lender of commercial real estate, you never needed to screen your calls as much as you do now. Everyone from the sophisticated private equity investor to the local owner of a few small strip malls thinks you are on a death bed ready to give away notes or assets for a song. Even some of your borrowers are calling with an expectation that you will accept unreasonable terms on performing assets, never mind those that are non-performing or extensively in default.
As much as possible, you are moving out due dates on maturing debts but it’s getting more difficult to make that work for several customers as senior management is starting to raise the bar on requirements given pressure or innuendo from bank board members and/or bank examiners. You anticipate that more of your borrowers are going to need additional help, whether with new capital or to better operate assets so as to get through the enormity of this poor economy. In fact, one of your greatest concerns right now is to minimize surprises. Knowing about potential tenant risk 6 to 12 months out has become more important not only on assets in your portfolio but those in the borrower’s portfolio that are funded by other banks. This is particularly true if those assets are out-of-state in an even softer market than yours. Increasingly, a borrower’s performing assets are being sold to support stressed assets in other segments of that portfolio.
How Portfolio Property Advisors Can Help!
We have CRE owner clients who are interested to work cooperatively with you and your borrower to efficiently get a deal done that benefits all parties. PPA works with you, through a borrower that you refer at no charge to you, along with an owner/operator like themselves in the subject property type, to assist the borrower in creating a plan of action that can be presented to the bank. In most instances, working with these “whites nights”, we like to consider not only on the subject property but also any other properties the subject borrower may have with your bank. We pay close attention to the bank’s objectives given the breadth of the borrower’s customer status with the bank, their deposit history, the bank’s commitment to the borrower’s core geography as well as property type and circumstance, etc. etc. Sometimes it is advisable for the bank to consider a loan discount that would result in removing the debt off their books. In that scenario, you have removed a problem loan that could require additional reserves, the borrower is able to avoid a foreclosure and the new owners feel they have acquired a good asset at a reasonable price.
We work all over the country in all categories of assets and specialize in responding quickly to urgent situations. The quality of our owner/operator involvement and know how can often help to get tenants, other lenders, suppliers, other equity investors and various important constituents to reach agreement as much of mitigated risk is avoided with such a strong new player/owner in the mix.
Our partnership with Third Wave Partners of Los Angeles, California through the Next Wave Advisors joint venture and our relationship with MB Real Estate based in Chicago and New York City, are integral to working with banks and commercial real estate owners to address many of the needs mentioned above.
If you would like more information on how PPA can confidentially work with you and your bank, please contact Larry Brewster at 281-342-2122.