commercial real estate

One of my clients - an investor and owner of a commercial mortgage brokerage business - confessed earlier this week that he was having a chicken little moment.

Offers he’d made earlier in the year to buy product that had been turned down - he’d been third or fourth in the bidding sometimes - were now coming back to him. He had more opportunities than he knew what to do with.

It was exciting at first, until he realized there were no lenders out there to finance the opportunities. Loans offered last week were no longer on the table. Many of his sophisticated equity partners were “on the sideline” for now.

It’s time for brokers and buyers to go where the market is taking them — and that is to distressed assets. My primary focus is on talking to the most motivated sellers: cash hungry sale leaseback prospects, lenders with troubled loans or REO to sell quickly at a discount, troubled owners, and the like.

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The pool of commercial lender owned real estate (or real estate owned - reo) Much foreclosed commercial property today was encumbered by a CMBS loan (i.e. securitized, conduit loan). When CMBS loans go into default, a third party called a special servicer takes over. There is a small handful of special servicers nationwide assigned the duties of working out troubled loans or if necessary taking them through the foreclosure process. You need to get to know the special servicers, ideally before they need you. the mortgage bankers association should have a list with contact information (mbaa.org). call each one, ask for the person dealing with “troubled loans” and real estate owned (reo) in your state. then “farm” them (to borrow from the residential parlance), calling or emailing them periodically and offering to help with market information if they need your help.