Remington Capital – Joel A. Nathanson

Wells Fargo & Co. and LNR Property confirm that they are each looking to sell some $1 billion of distressed commercial property loans and assets.

Read More Here.

Remington aims to combat this massive sell-off trend by offering Distressed Owner Recapitalization programs.

If you have a commercial project, I would like the opportunity to take a look at it.

Joel Nathanson
Senior Executive

The majority of institutional equity that has been raised over the last 3 years, was to purchase distressed notes. These distressed notes are made up of  a combination of preforming and non-preforming assets. Unfortunately, for the large private equity funds the number distressed notes hitting the open market is minimal compared to their initial expectation. The major reason, banks have continued to “extend & pretend” the current notes as long as they are cash-flowing assets and can service the debt. For the properties that banks won’t negotiate on, the only option is to recapitalize or be forced in to foreclosure. Remington’s Distressed Property Recapitalization Program (DPR) is the best option for property owners that are in this situation. With this program, we can work with our over 500 capital relationship to bring all parts of the capital stack to the table and find a viable solution.

It is no surprise that the aggressive commercial lending over the last 10 years is the main reason for bank failure. Its stated in a recent article that 140 banks failed in 09′ with over $170 Billion in assets. Please see the entire article below.

See Full Article

Banks and commercial lenders will continue the deleveraging trend throughout 2010. The trend is starting to be seen in secondary and tertiary markets hardest hit with increasing vacancies and decreased cash-flow.

The CMBS market shows a 4.5% default rate on their entire portfolio, with lodging at 11%, and multifamily at 7%. CMBS  transactions that are in risk of default are being turned over to special servicers to ultimately make a decision to either do a work-out or foreclose and auction off assets. The CMBS transactions will be the hardest to recapitalize due to the amount of red tape that borrowers will need to go through.

The good news is that Remington has funds that are being deployed to recapitalize these types of transactions. Please give me a call and let’s discuss.  In addition to our expert advisory services, we are your best access to commercial capital.

Thank you – Joel Nathanson, Remington

2010 is shaping up as a “good news, bad news” type of year for commercial real estate owners if what industry experts are saying proves to be correct. At least there’s some good news, eh?

The good news they say is that transactions are likely to pick up speed in 2010, while new commercial development will remain pretty dead in the water for right now.

The worst news concerns owners of highly leveraged commercial properties who financed them at the 2005-2007 market peak and can no longer pay back the soon-to-mature loans. The worst-case scenario is that tight credit and plummeting property values will force thousands of them across the country to sell out (if a buyer for an underwater property can be found), declare bankruptcy or recapitalize. The upcoming proliferation of distressed owners – and their need for Recapitalization – will keep brokers busy in the coming year. 

For brokers, distressed owners represent a new business opportunity. It is a crisis – and as the Chinese say – every crisis is filled with danger AND opportunity.

At Remington, one way we’re taking advantage of the opportunity on behalf of our client brokers is through our relatively new Distressed Owner Recapitalization (DOR) Program. With the DOR Program we partner with brokers and distressed borrowers using the Remington global network of private sources of capital for investment in troubled properties.

We do all the work. And you share in the benefit, earning 25% of the closing fee for every referral. To find out more about the Remington DOR Program and how it can work for you, give me a call at Remington and let’s talk!

Thank you – Joel Nathanson

In a Mortgage Bankers article this week, Michael Murray predicts a ’meaningful’ end-of-2010 recovery in commercial real estate. I agree that property values will stabilize by the end of 2010.

This will happen for another of reasons. One is that small community and regional banks not in the class of being “too large to fail” will be forced to sell their distressed notes at a discount to achieve the ratios of cash/distressed debt that are required for by the FDIC. With the banks selling the notes at a significant discount, the private sector will begin to deploy capital under stricter underwriting guidelines. With the capital markets beginning to recover, the number of transactions will increase, which in-turn will provide much needed comps to support property values.

In the meantime, owners are distressed and if their lender decides to call their note before property values recover, it would be a disaster.  That’s exactly why we’ve designed the Distressed Owner Recapitalization Program – please call me for details!  Thank you – Joel Nathanson, Remington.

Due to the expected increase in vacancies in the “4 main food groups” (office, retail, industrial, multifamily) it is becoming even tougher for commercial propery owners to service the current debt on their property due to low cash-flow. These vacancies are expected to peak in late 2010 or early 2011 and we can expect during this time that there will be a large number of foreclosures unless the property owners can recapitalize the capital stack.

On new purchases, underwriting has become much more conservative. Lenders have gone back to old calculations to evaluate a potential property, and this calculation is called “the debt yield calculation”. Typically lenders are looking for a 11% – 14% debt yield. The debt yield is calculated by dividing the NOI by the loan amount.

Read more on the background article for this blog post here: http://www.mortgagebankers.org/Newsletters/MBA%20Newslink/Issues/Volume8Issue237_web#9560

We are continuing to help owners and brokers with the Distressed Owner Recapitalization Program.  Call me for me information.  Thank you – Joel Nathanson – Remington

Commercial real estate is edging toward disaster.  CMBS delinquencies were up to $32.55 billion in September from $5.39 billion a year ago, a five-fold increase.

We’re doing something about it. Thanks to the leadership of our Chairman Andy Bogdanoff, Remington is working with brokers and owners on a solution option. It’s called the Distressed Owner Recapitalization (DOR) program. It’s a new financing program and is focused solely on helping distressed owners recapitalize troubled properties that banks can’t or won’t refinance. Key to the DOR program is the Remington global network of active public and private sources of fresh, new capital available for investment in troubled properties.

Recapitalization of distressed properties can be a market opportunity for all the involved parties. Recapitalization offers the distressed owner something that selling the property or declaring bankruptcy cannot. It allows the owner an opportunity to stay in the game and to participate when market values turn around.

Give me a call and I can explain further. We’re helping owners to get out of impossible situations, and brokers to close more transactions.

Thank you!  Joel Nathanson – Remington

There was an compelling article in today’s Mortgage Bankers newsletter.

http://www.mortgagebankers.org/tools/FullStory.aspx?ArticleId=9305#full

I’ve come to believe that delinquencies for CMBS loans will continue to rise due to aggressive lending practices especially in the hospitality sector. With vacancies increasing and cash-flow decreasing, commercial real-estate owners are forced to pledge additional cash to service the loans. There are other negative factors including investors overleveraging, lack of available short term debt, and a lack of personal liquidity. . . all forcing more properties to become delinquent at an ever-alarming rate. In too many cases many owners are simply turning over the keys to the property, OR, they are finding a way to recapitalize the capital stack.

At Remington we are experts in working the capital stack to our clients’ benefit. In addition our access to commercial capital is unmatched. When working with Remington you can be assured of fresh access to capital. Please give me a call and I’d be happy to discuss your financing options.  One new financing program introduced by our Chairman Andy Bogdanoff is for distressed owners – and we’re helping people every day find a way to successfully navigate these challenging times.

Thank you.  Joel Nathanson

Here at Remington, many of the brokers I’m dealing with on a daily basis are working with owners in hospitality . I’m not surprised that the hotel sector leads the CMDS delinquency trends in October.

There are a number of issues impacting hospitality that are related to disposable income chalenges for both business owners and consumers. The decline in travelers has forced an increase in competition between hotel owners to stay competitive on daily rates. That along with the higher daily vacancy rates have driven down hotel revenue significantly.

It is taking more creativity to finance and recapitalize hospitality-related commercial property investments. At Remington our access to actively-lending capital sources becomes a light at the end of the tunnel for many owners (and brokers) who are looking to start or restructure a transaction. 

An example is a recreational vehicle park in the midwest that required property upgrades in order to reverse declining sales. Despite adequate cash flow and a solid financial history, lenders refused to refinance the maturing loan because declining property values caused a loss of equity. Acting as financial adviser, Remington creatively restructured the distressed owner’s business plan in such a way that it could successfully tap into its extensive network of private lenders and investors. Instead of having to sell or declare bankruptcy, the distressed owner secured through Remington a competitively priced $1.58 million SBA 7(a) loan.

Read more about the hospitality sector data here: http://www.mortgagebankers.org/tools/FullStory.aspx?ArticleId=9005#full

Thank you. Joel.

Joel Nathanson – Remington