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Reworking Commercial Real Estate Loans in a Distressed Market: Preventing Defaults and Mitigating Near-Term Losses

Recording of a 90-minute premium CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Thursday, September 21, 2023

Recorded event now available

or call 1-800-926-7926

This CLE webinar will explore the current distressed commercial real estate (CRE) market and how lenders are handling performing or non-performing loans in light of the pending and upcoming market turbulence. The panel will also discuss adjustments to existing transactions now and new provisions to explore in loan agreements going forward.

Description

The real estate finance industry trade groups predict a 15 percent annual drop in CRE lending in 2023. Rising interest rates, a slowdown in the CRE market, and the proliferation of remote work pose challenges for lenders especially with respect to loans secured by certain asset classes, like office buildings. Because of a large number of maturities coming due for both balance sheet and conduit loans in the coming months, the current CRE lending landscape is becoming extremely challenging for both borrowers and lenders.

To offset the potential of a CRE crash and to stave off defaults, banks may consider offering borrowers loan extensions and modifications, selling derivatives to fix interest costs, and offering subsidized loans to investors to purchase defaulted loans.

Listen as our authoritative panel discusses the impact of the current CRE market on existing and future real estate finance transactions and steps lenders can take now to mitigate defaults and near-term losses on current and future loans.

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Outline

  1. Overview of the current CRE market
    1. Interest rate woes
    2. Number of loans nearing maturity
    3. Market outlook
  2. Types of lenders/deals most negatively impacted by the current market
    1. Common distress scenarios
    2. Workout viability in current market
    3. Trending solutions
    4. Lender remedies
  3. Practical steps to mitigate defaults and avoid losses
    1. Default letters
    2. File review for lenders and borrowers
    3. Pre-Negotiation agreements
    4. Loan modifications
    5. Forbearance agreements
  4. Strategies and key takeaways

Benefits

The panel will review these and other key issues:

  • How should loan documents address commercial and retail tenant defaults due to the current market pressures?
  • What changes may be necessary to debt-service coverage ratios and other covenants to avoid loan defaults or cash management triggers?
  • How should loans involving future disbursements be tailored to address the current economic uncertainty?
  • How should loan terms be structured in light of rising interest rates?

Faculty

Lipkis, Herman
Herman R. Lipkis
Partner
Holland & Knight

Mr. Lipkis focuses his practice on structured real estate finance, acquisitions, dispositions, hospitality...  |  Read More

Stupar, Bob
Bob Stupar
Partner
Bryan Cave Leighton Paisner

Mr. Stupar concentrates his practice on lending and servicing of commercial real estate conduit and balance-sheet...  |  Read More

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