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Lender Advisory and Asset Management
The financial crisis has caused a significant drop in real estate values. Lenders have now become de facto owners of property, and they will, in some cases, soon become actual owners if borrowers cannot pay off their loans. Most lenders have not been in this position since the early 1990s and may be unfamiliar with the day-to-day business of owning real estate. Being an owner involves more than hiring a property manager or relying on the advice of lawyers or a leasing team. Lenders need someone to look after the overall value of their assets.
Even before a default occurs, lenders should examine how borrowers are managing the collateral that secures their loans.
• Are borrowers making short-sighted decisions in order to save money and increase their immediate cash flow?
• Are tenant needs being met so that they will renew their leases?
• Are borrowers even looking for tenants if they know that more dollars will be required to pay for leasing costs?
If a lender has to foreclose, they must be ready to act immediately to minimize disruption to the occupants, reposition the asset, and dispose of it before incurring any unnecessary costs.
• Do the tenants understand the situation, or do they just hear rumors?
• Has the foreclosure or deed-in-lieu process created an opportunity for a new assessment and lower real estate taxes?
• How do you reassure the market that the property is still open for business?
Properties in development pose a whole series of additional problems, as do fractured condominium buildings.
• How long can an unfinished building be left unfinished?
• What contracts can be renegotiated?
• How should condo sales agents be properly incentivized in a down market?
Knowing to ask these questions and the many others, and knowing how to answer them, requires an experienced asset manager. Monument Realty, a full-service real estate company, has that experience, having developed and operated over 5 million square feet of office space, 5,000 residential units, and several hotels.
Monument Realty has worked with a variety of equity and debt partners over the last decade. Just recently, Monument dealt directly with the bankruptcy of Lehman Brothers. Even in the midst of upheaval, Lehman and the associated lenders concluded that management of the affected assets was best handled by Monument. This experience gave us a thorough understanding of the needs of distressed lenders and properties.
Monument Realty is ready to share this experience with lender clients and other owners of real estate. Whether working for Lehman Brothers, working for our own account, or working for lenders, Monument thinks like an owner. or lenders that have become, or may soon become, owners, this is the type of asset manager that you need.
Services
Prior to Bank Control of an Asset
• Due diligence on owner/borrower status
• Analysis of existing market and current value
• Analysis of ownership impact on value and tax basis
• Review of service contracts
• Review of building for deferred maintenance/tenant relation issues
Projects in Development
• Construction stabilization
• Entitlement and other pre-development services for land
• Analysis of mothballing versus project completion
• Analysis of contractor liens
• Re-negotiation of existing design and construction contracts
Condominium Properties
• Lease versus sale analysis
• Enumeration of declarant liabilities
• Condo sales
• Maintain relationships with condo board and unit owners
Stabilized/Stabilizing Assets
• Leasing, including negotiation of leases
• Direct property management or supervision of third-party managers
• Communication with tenants to minimize rumors and loss of income
• Capital expense planning and management
• Management of property disposition process
For more information contact:
Douglas D. Olson
Executive Vice President
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202.777.2004 |
