ATLANTA, GA (June 13, 2011) – An increasing number of borrowers and lenders are coming to terms in commercial loan workouts for distressed assets.
The “Commercial Real Estate Show” this week talked to a panel of experts about the status of commercial mortgage maturities and delinquencies. The panel, which represented both lender and borrower perspectives, shared best practices and strategies for loan workout success and increased recovery rates.
“We are definitely seeing a step-up in workouts,” s
aid Tom Fink (top right photo), managing director of Trepp LLC, a leading provider of CMBS and commercial mortgage information and analytics.
In the last 18 months, Trepp estimates there have been about $30 billion of loan modifications and extensions.
The data show more workouts are likely on the horizon.
Over the next three years, there will be about 5,000 to 6,000 maturing CMBS loans — worth an estimated $225 billion, according to Trepp LLC. Including banks and insurance companies, that figure balloons to more than $1 trillion, Fink said.
“Even as the markets improve, I don’t see any decline in the volume of distressed assets that have to be worked out,” Fink said. “What we have to do is we have to re-price the market and people have to recognize that there has been a lot of value destruction.”
That value destruction means many borrowers are underwater. Trepp estimates as many one-third of properties with CMBS loans may be worth less than the loan amount, while in the overall market, as many as 50 percent of commercial borrowers may be underwater on their properties.
But just like previous market cycles, this one offers plenty of opportunity for borrowers and lenders alike to rebound. Our panelists provided a plethora of tips and strategies to help people on both sides of the table make a deal as painlessly as possible.
The show aired Saturday on Biz 1190 and Sunday on Talk 920 in Atlanta and is available for download here. Other guests included Henry Lorber, Managing Director of Hays Consulting; Joe Briner, principal at Grisanti, Galef & Goldress Inc.; Susan Tarnower, Senior Counsel at Thompson Hine LLP; and Chuck Beaudrot, Partner at Morris, Manning & Martin, LLP.
The next “Commercial Real Estate Show” will air June 18 featuring interviews from leading real estate reporters at the National Association of Real Estate Editors conference in San Antonio. Don’t miss their unique insights on the national real estate market.
Contact:
Christin Clay
Wilbert News Strategies
1720 Peachtree St, Suite 1040
Atlanta, GA 30309
p 404-965-5025 | m 404-405-2354
Twitter: @christinclay10
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