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| Michael Bull |
ATLANTA, GA– Commercial real estate lawyers are doing less
work with distressed assets and are instead spending more hours on leases and
investment sales.
That was one of the
points made by a panel of attorneys on the most recent episode of the
“Commercial Real Estate Show” radio program, hosted by Michael Bull of
Bull Realty.
The episode provided an enlightening look at the various
legal issues confronting the commercial real estate sector. Topics included
loan workouts, selling and buying notes, foreclosures and the most pressing
lease issues.
 |
| Andrew Litvak |
“The last few years
have definitely been a turn for the better,” said Andrew Litvak, a
partner with the Nelson Mullins law firm. “We’re seeing more of what I would
characterize as good work: leasing activity, investment sales and purchases.
There’s still a lot of pent-up distressed real estate and problems to be worked
out, but it seems to be tapering off.”
 |
| Jeffrey Schneider |
When faced with
troubled assets, many lenders are choosing to sell notes instead of foreclosing
on the underlying properties, as foreclosure can be an expensive process that
exposes them to the risks and hassles of property ownership.
Someone thinking
of buying such a note should be prepared to perform rigorous due diligence,
especially when, as is often the case, the loan was between a bank and a
borrower who have enjoyed a long and friendly relationship, said Jeffrey
Schneider, a partner with the Weissman Nowack Curry & Wilco law firm.
 |
| Michael Ward |
“You’ve got to
really drill down on the loan-servicing side,” Schneider said. “Make sure there
aren’t any handshake agreements to waive penalties or payments. Get as much
loan-servicing information as you can get.”
Due diligence can
become especially complicated and time-consuming when buying a large portfolio
of loans, because the underlying assets typically are scattered across several
states, said Michael Ward, who is of counsel at the Greenberg Traurig
law firm. “From a legal side, the sheer due diligence … can be fairly
intensive,” Ward said.
 |
| Carter Stout |
Such large loan portfolios usually are aggressively pursued
by several bidders, Ward added. “You’re going to have two, three or four large
players going after that one portfolio, and they’re very competitive,” he said.
Lenders generally
are more willing to make loans these days but they also have beefed up their
loan covenants, said Carter Stout, real estate practice leader at the
Stout Atwood LLC law firm. By and large, borrowers don’t have much negotiating
power to make those covenants less severe, Stout added.
“The practical
reality is, generally, there are very few sources of money out there, and
[borrowers] are stuck with a small group of lenders who are going to insist on
certain covenants,” Stout said.
For a complete copy of the company’s news release, please
ontact:
Stephen Ursery
The Wilbert Group
404.965.5026
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