the horizon for the nation ’ s shopping centers and retail real estate entrepreneurs . Defaults are continuing to occur , but the economy is not experiencing the large-scale disruption that usually accompanies large loan defaults . This combination may be a result of relaxed banking policies — federal bank regulators are not leaning on banks to come down harder on borrowers of loans that have gone bad .
Because banks have been given the opportunity to essentially ignore bad loans without negative consequences , they are sticking their collective heads in the sand . But that ignorance cannot last .
NOW IS THE TIME TO RESTRUCTURE Kicking a problem down the road can be an effective solution . Time changes situations after all . Sometimes the cause of the financial distress can be eliminated . Sometimes interest rates will drop , ushering in new financing opportunities . Sometimes the business or CRE entity can be restructured to remove the cause of the financial distress .
Avoiding the problem , however , usually is not a successful long-term solution for those already in financial distress . Interest rates are beginning to inch up , and , with inflation increasing , the Federal Reserve has said that rates are headed only one way in 2022 — and that is up .
Already faced with the decline of brick-and-mortar businesses as online shopping becomes the new reality , the retail sector saw these problems become more severe as people moved more shopping online to reduce risk from the pandemic .
With all these factors at play , the owners of CRE property will have to contend with the consequences of default sooner or later . It seems advisable to consider addressing distressed financial assets by restructuring now , while lenders still are hesitant to exercise their rights to bad loans . They may not be willing to take over properties now , but that approach is likely to change in the coming months .
Now is the time to seek counsel from experts to stave off a Chapter 11 bankruptcy . Waiting too long to deal with financing issues often makes bankruptcy inevitable . Early intervention and attention to available alternatives can help real estate owners and investors mitigate the risk of bankruptcy before things go too far . Astute legal guidance can be a lifesaver for property owners and the employees whose livelihoods depend on the success of the business .
During times like these when we anticipate an increase in companies grappling with distressed assets , real estate owners can use a variety of methods to maximize value , restructure existing debt , repurpose assets , and modify their business to retain assets . The right counsel can help empower real estate owners with distressed assets to repair damage and build a better and brighter future .
William Lobel Founder and president of California-based
Distressed Capital Resources Contact him at wlobel @ distressedcapitalresources . com .
Financing Outside the Traditional Bank Profile
Clearinghouse CDFI is a full-service , direct lender . We work directly with brokers , developers , and borrowers to finance loans that do not fit the traditional bank profile .
No hard money ! We finance community projects with measuerable impacts in underserved areas .
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25 Basis Points
of loan amount for all closed loans . * New Borrowers Only *
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Up to 80 % LTV Loan Amount : $ 500K - $ 15 Million
LOAN SPECIALIZATIONS : Charter Schools Affordable Multi-Family Apartments Special Needs Housing Churches Health Care Facilities Small Businesses Office & Retail Nonprofits Mobile Home Parks Industrial / Mixed-Use
LOAN USES : Acquisition Refinance Construction Renovation Gap Loans Operations Expansion
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TERMS UNDER 5 YEARS : 5 % -5.5% 3.5 Year Pre-Payment Penalty Lockout !
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CIREMAGAZINE . COM COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE 17