Rescue Capital Provides Relief to Distressed CRE

Rescue Capital Provides Relief to Distressed CRE

"Rescue Capital" are funds provided by investors to help restructure commercial mortgages in default, or heading toward foreclosure. In return for injecting needed capital into a proposed commercial loan modification/commercial loan workout deal, Investors become equity partners and lenders are more willing to restructure non-performing notes.

According to a recent CoStar Group article by Randyl Drummer, William R. Lindsay, co-founder of the San Francisco-based real estate investment firm, PCCP,LLC stated "the pendulum has swung back a bit toward the borrower, if the borrower is in a position to take advantage of opportunities that are coming as well-capitalized lenders move through their inventory of workout assets -- and "make commercially sensible decisions about what assets to take back, what to modify and what to sell at a discount."

Rescue capital can be used as leverage for lenders to approve commercial loan workouts by reducing principal amounts, extending loan terms, lowering interest rates, resetting balloon payments, deferring payments, lowering fees, etc. Funds can also be used by borrowers for operating, renovation and leasing expenses.

A resourceful third-party, commercial loan workout firm should have access to rescue capital. Investors with rescue capital funds should offer one or more of the following services:

1) Provide incentives for lenders to modify commercial loans
2) Help borrower to possibly refinance into a new loan
3) Purchase mortgage notes reaching their maturity date at a
4) Provide operating expertise
5) Generate a detailed financial analysis report to provide
strategic decision-making.
6) Give useful knowledge of specific lender practices
7) Offer real estate market insight and established professional

For owners of distressed commercial real estate who can't refinance, are behind on their mortgage payments or facing foreclosure, rescue capital can provide needed funds to obtain a commercial loan workout approval and get back on the road to financial recovery.

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