Debt/Equity Restructuring
The unprecedented volatility of the real estate credit and equity markets has virtually paralyzed real estate owners and stymied traditional investment strategies for the foreseeable future. Credit is scarce and/or only available on unattractive or unworkable terms. As a result, borrowers are being forced to consider unfavorable liquidation or recapitalization options.
DTZ Rockwood’s highly experienced team has been at the forefront of providing advice to borrowers, including Operating Partners, General Partners, Limited Partners and Institutional Investors, regarding a broad range of debt and equity restructuring situations, which include: conventional debt and equity recapitalizations; loan extensions/modifications; structured loans with securitized A-notes, B-notes and mezzanine classes; construction loans secured by an incomplete development project; depleted equity with onerous tax consequences to the borrower, resulting from foreclosure or offering a deed-in-lieu; loans with multiple institutional lender participants, etc.
On behalf of our clients, the firm is also facilitating the transfer of loans from Master Servicers to Special Servicers, and conducting in-depth analyses, valuations, document reviews and studies of the collateral, as a basis for developing highly customized proposals designed to best meet our clients’ objectives. We are also strategizing with the Special Servicers, Master Servicers and the Controlling Class Certificateholders in an effort to provide our clients with the most efficient and effective resolution – reaching an optimal outcome that is defensible and acceptable to the securitization trust. DTZ Rockwood’s track record in this specialized area is based on a comprehensive understanding of needs and constraints, combined with an ability to develop solutions that meet the needs of all parties involved.
On behalf of a national apartment operator and their pension fund partner, DTZ Rockwood performed advisory services for a $300+ million senior loan secured by multifamily assets which carried negative cash flow. The assignment required loan documentation review along with extensive discussions/negotiations with the Master Servicer, Special Servicer and the Initial Controlling Class Representative, with which DTZ Rockwood had longstanding relationships, regarding the pooling and servicing agreement for the trust.
DTZ Rockwood advised a regional value-add operator/developer (the borrower) in connection with a $15+ million securitized loan on two office properties. As an alternative to foreclosure, DTZ Rockwood negotiated loan modifications and waivers in pursuit of a discounted pay-off and reduction in monthly debt service payments.
On behalf of a commingled fund run by a global institutional investment manager, DTZ Rockwood negotiated loan extensions of mortgage and mezzanine loans (maturing in less than 3 months at the time of retention) secured by ten Class A office properties. For this assignment, DTZ Rockwood undertook a dual path process of identifying a new sponsor to provide equity capital, operate and manage the properties, and assessing alternative courses of action with the sponsor, senior lender, b-note lender and other mezzanine lenders, considering their respective motivations and constraints, to best restructure the debt.
On behalf of an investment management subsidiary of one of the largest US banks, DTZ Rockwood implemented the restructuring of a $200+ million mezzanine loan on a rental-to-condo conversion project in a major urban center. The project was undercapitalized, and the developer would not have been able to complete construction without restructuring the debt.
DTZ Rockwood provided advisory services to a global financial services firm and their operator/developer partner on their various debt positions securitized by a distressed multifamily portfolio throughout the U.S. The assignment involved extensive loan documentation review, valuation of the portfolio and devising a strategy with regard to loan modifications resulting in principal forgiveness.
