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Posts by Lawrence Selevan
In just two weeks we’ve seen some major changes in the distressed asset marketplace. Not only is activity increasing as the year goes on, but where we once found the number of assets far outweighing the number of willing investors, we’re now finding more investors per property than ever before. More >
As the market continues to evolve, it appears the only remaining business activity is restructurings. Some things are starting to thaw in the leasing and occupancy rates across the country. Rental rates in multifamily retail are starting to creep up while office rates are stabilizing in different markets nationwide. More >
Lenders and servicers continue to be inundated with properties entering special servicing, expanding from multi-family housing to office, retail and other commercial assets. As we originally anticipated, 2012 will be the major year for defaults in commercial properties, especially office properties throughout the United States. Momentum has slowed as servicers are bogged with the influx of properties.
As a result, we’re witnessing slowdowns in the workout process. A negotiation that would take three to four months is now taking five to seven months to get the same response because of the backlog. We also find that borrowers are hiring more professional workout advisers like ourselves to handle these accounts for them because they realize that representing themselves in front of a lender puts them at a great disadvantage. They find that their attorneys can’t have the communications early on with their lender that typically need to take place, usually only speaking with the lender’s counsel which automatically turns the process toward litigation instead of a resolution. More >
Lenders and servicers are being inundated with defaulting loans. Banks have been exhibiting an “extend and pretend” mentality, with loans being extended in hopes of future real estate appreciation. This has been a gradual process with banks spreading out their markdowns to boost quarterly earnings.
However, this attitude is quickly coming to an end as lenders realize that marking to market and taking write-downs will be required to accelerate the process to a meaningful “reset” so that the capital markets may stabilize and normalize again. Lenders realize that their performing loan may risk leaning towards non-performing loan as the capital markets remain relatively frozen and securitizations are slow to aggregate loans to restart the CMBS markets. More >