The Recipe
Borrowers, having experienced operating their assets on a day-to-day basis for many years, usually have a clear understanding of the challenges they face and a conception of a solution to address these issues. Lenders, while lacking operational expertise, don’t simply trust a borrower's assessment. They depend on third parties, who often create obstacles to achieving a deal.
Before a deal can be considered, four components must be addressed. We are proud that we know of no other firm that addresses all four.
Do No Harm: Often, loan advisors and mortgage brokers pass on information that may appear incriminating (even if it is not) and can derail negotiations, costing the borrower their property and even millions of dollars in settlement costs. We work closely with borrowers and their counsel to mitigate these risks and prevent innocent miscommunications from leading to severe consequences.
Valuations: In situations of distress, lenders often claim that a property's value is high and Borrowers valuations come in lower. We use specific strategies to establish a consensus on the underlying asset’s value by guiding both parties so that a deal can be reached.
Asset Management: Restructuring debt and managing distressed assets can take years. During this time, property operations can significantly differ from normal circumstances, especially post- default. This includes executing leases, cash management, paying vendors, and even basic operations. We serve as the borrower's de-facto distressed asset management team, consulting our extensive network of brokers and relationships to develop strategies that add value to the underlying assets.
Structuring the Deal: Many workout deals fail within months. Borrower must be advised to walk from unsustainable deals rather than being set up for failure.
The Result
