Commercial Debt Restructure

The commercial real estate industry (i.e., office buildings, hotels, retail stores, shopping centers) includes $3.4 trillion of real estate. $700 billion of loans connected to the commercial real estate industry have been packaged together into bonds and sold to investors, i.e., they were securitized. Commercial mortgage defaults are occurring at the rate of $2 billion a month as of today and could reach nearly $3 billion a month by the end of this year. Fitch Ratings, Financial Times

...Of particular concern is $154.5 billion of CMBS loans coming due between now and 2012. About two-thirds of that likely won't qualify for refinancing, according to a recent report by Deutsche Bank. The bank projected that the default rates on the $700 billion of outstanding CMBS eventually could hit at least 30%, and loss rates, which take into account the amounts recovered by lenders, could reach as much as 13%, more than the peak seen during the commercial-real-estate collapse of the early 1990s. WSJ REAL ESTATE JUNE 10, 2009

Read the latest banking news at FinancialStability.gov , a US Treasury site designed to provide consumer transparancy.

Have you experienced any of the following?

A Commercial Lender request for additional equity?
Difficulty in making monthly mortgage payments?
A Notice of default or foreclosure proceedings form lender?
High vacancy/Turnover?
Ineffective Property Manger or Broker?

At Genesis, we can help! We can provide:

A Comprehensive evaluation of your Commercial Portfolio and Financial Situation
An experienced team of professionals that will provide a thorough analysis of your loan(s) and guarantee exposure to your lender and other market opportunities
We will develop an action plan for approaching your commercial lender (or your lenders appointed attorney)
Give advice or interact as little or as much as you request to use the tools we have to provide for the best possible outcome
Assist in renegotiating the terms of your existing commercial mortgage to help avoid a default
Assist with the unexpected items that always seem to come up to obtain a commercial debt restructure or workout that preserves your asset(s)

Commercial Real Estate Consulting Services

Debt Restructuring plus a Business Plan

Many small commercial debt restructuring plans will depend on the financial condition of the borrower's business. The lender must know that from a business perspective that there is a likelihood of producing enough profit to service the new payment successfully.

This is the main point of departure from a residential program. Regardless of the type of property in question, your lender is going to want to see a business plan. The plan should include realistic numbers and a convincing explanation as to why the plan will work.

Be prepared to present a realistic proposal and back it with solid numbers. Consider seeking the services of an accountant, attorney, and an experienced loan workout consultant. A negative result could mean the loss of a property and a business. One shot is all you may have.

Our results have literally saved property owners from foreclosure and have allowed owners to become Cash Flow Positive.

FAQ’s

What is a commercial debt restructuring?

Commercial debt restructuring is when a business or individual that owns a commercial property such as a retail, office, industrial, or apartment building, agree with the mortgage holder to change the terms of the original note.

These loans are often known as portfolio loans although they can be securitized like Fannie Mae or other single family residential loans. Since the investor of the loan is often easier to identify and approach, the consultant hired by the property owner is much more effective in negotiating a solution that benefits both parties.

Recently the Federal Reserve added commercial mortgage backed securities (CMBS) to the Troubled Asset Lending facility (TALF) program in an effort to mitigate the coming losses that commercial mortgage bond holders are going to take. The TALF program facilitates refinancing of commercial loans by making cheap tax payer money available to commercial lenders.

Why would the banks want to renegotiate?

Often, the banks would rather change the terms of the loan to a payment that you can afford rather than take the property through foreclosure. This will allow them to keep the loan on their books at full value rather than being forced to mark it down according to current mark-to-market accounting rules.

Are there other programs available?

Our network of strategic partnerships affords us the ability to approach the bank on several levels. When workouts are not available, having sources that can buy your property or your note from the current lender gives you the ability to add alternative solutions to "right side" your property. Preserving your cash flow, and ultimately your equity, requires the availability of multiple solutions.

Do I qualify for commercial debt restructuring?

There are many factors that determine on what basis a lender will modify a loan; equity, income, payment history, debt ratio and many other factors. An experienced commercial loss mitigation consultant can guide you as to the best approach to take. Every case is different. If the property is producing income that you can prove then you probably will be able to come to a resolution.

Can I do it myself?

Commercial workouts are more art than science. You can negotiate on your own but you are more likely to get a better deal if you have a professional negotiator on your side. Professional loss mitigation experts have existing relationships with most lenders and know how to get to the decision makers.

(Some content on this page has been provided as a courtesy of http://www.commercialmodification.com/, Ted Schmidt, President, Leadsnet, Inc. Visit his Blog Here)