Success or Failure? Restructure Commercial Real Estate Loans

In order for any developer to restructure commercial real estate loans, an audit of the property’s long term viability will be required by the bank. Ultimately, the bank wants to preserve its capital, and a default and foreclosure on an underwater property won’t do that. So the bank does have an interest in actually seeing you succeed; its primary concern during negotiations will be your riskiness. You’ve come close to default, which the bank will leverage against you for quite possibly a greater total cost to your business.

Through the commercial loan workout your concern is staying afloat, not just while the market recedes now, but through possible further recessions down the line. You don’t want to get into a situation where you have to restructure commercial real estate loans again. Chronic restructuring and prudent commercial loan mods can be used against you whenever debt service puts in you and your firm in the red.

Real estate is a social enterprise, ultimately. Commercial developer circuits gossip well, and reputations and goodwill make the difference between success and mediocrity. Many of these key characteristics of commercial development work for you when times are good, and against you when times are bad, compounding the negatives about the property. Through the FDIC prudent commercial loan Workout proceedings, tenants will be screened by the bank on larger properties, in order to better assess and appraise the property’s actual value. Your books will be scrutinized, and you’ll have to sell your business plan about the property harder than you had ever had to before.