Honesty and Transparency the Key to Loan Workouts Noted on Atlanta’s Commercial Real Estate Show

Michael Bull

ATLANTA, GA (July 1, 2013) – A borrower burdened with a troubled commercial real estate loan needs to be upfront with his lender about his problems and be aggressive about finding a solution.

That was the advice of a panel of loan-workout experts on the most recent episode of the “Commercial Real Estate Show,” hosted by Michael Bull of Bull Realty.

The episode features interviews conducted by Bull at the Information Management Network’s Special Asset Executive Conference on Real Estate Workouts, held in June in Atlanta. In addition to loan workouts, the episode covered such topics as short sales, note sales and foreclosures.

Wendell Burks

“The best workouts I’ve seen are the ones where the borrower takes an active interest in a solution and where the borrower comes to the bank first and says, ‘I’m in trouble, and this is why I’m in trouble,” said Robert Brookes, president of Home Federal Bank in Hollywood, Fla.

Bull’s other guests agreed. “Lenders will be more likely to work with you as a partner if you’re honest with them and lay your cards out on the table,” said Alan Tantleff, senior managing director of New York-based FTI Consulting.

 “I can’t tell you how many times I’ve worked with lenders who don’t trust the borrower. Then it becomes personal, and they want to go after the guy.”

Robert Brookes

Distressed borrowers also should take advantage of the robust private-equity sector, guests noted.

 “The best thing borrowers can do is go find private-equity partners who can help them stabilize their properties or give them the capital they need to go negotiate with their banks in order to get back control of their assets,” said Wendell Burks, senior vice president of special assets for Regions Bank. “There is so much equity out there.”

On the other side of the table, lenders must be realistic about troubled borrowers, guests said. “I think with the volume [of distressed assets] that banks have had, they have had to look at the [workout] process differently,” said Phillip Mays, chief legal officer at Glass Ratner in Atlanta.

Phillip Mays

“If banks want to actually work through the deals and maximize their recovery, a lot of times that involves really opening their eyes to what the borrowers’ and the guarantors’ capabilities are.”

Borrowers with CMBS loans set to mature in the near future may be able to finance their payoffs, said Grant Rogers, CEO of New York-based Talmage. 

“Most of these deals will perform until maturity and then, because they’re ’07-vintage deals, they’re underwater,” he said. “They’re way over-levered, and when the borrower comes to maturity, they can’t repay us … In fact, borrowers are finding that there is a financing market, and we’re getting repaid at par, and it’s a happy ending for everyone.” 

Grant Rogers

The entire IMN Special Assets and Workout Conference episode is available for download at www.CREshow.com. The next “Commercial Real Estate Show” will be available on July 3 and will feature important commercial real estate associations.

For a complete copy of the company’s news release, please contact:

Stephen Ursery

The Wilbert Group

404.405.2354

sursery@thewilbertgroup.com