Remington Capital

Anyone doubting that the commercial real estate industry is careening toward disaster may want to peek at the latest CMBS delinquency figures. They are soaring!  Up to $32.55 billion in September from $5.39 billion a year ago. That’s a five-fold increase in just 12 months and more than 14 times higher than in March 2007.  Translation: Banks aren’t the only ones undergoing a liquidity crisis. The fact is many commercial real estate owners and developers don’t have sufficient cash flow to service their debt.

That’s just an inkling of the real disaster confronting owners and developers in the next few years. Coming is a powerful one-two punch that may knock out thousands of real estate owners and developers across the country. Property values are plunging and are already down a whopping 40% since 2007. Worse yet, banks lack the liquidity to refinance even half of the $1.2 trillion in commercial real estate debt due to mature by 2013. That means thousands of owners may be unable to refinance their properties. Many distressed owners will have few choices other than to sell their property, if they can find a buyer, or declare bankruptcy.

As a result, Remington has been working closely with brokers and owners developing and alternative option. We call it the Distressed Owner Recapitalization (DOR) program. It’s new and focused solely on helping distressed owners recapitalize troubled properties that banks can’t or won’t refinance. Key to the DOR program is the Remington global network of active public and private sources of fresh, new capital available for investment in troubled properties.

Not to be overlooked by owners or brokers is the fact that recapitalization of distressed properties can be a market opportunity for all concerned. While there is a loss of equity in the transaction, recapitalization offers the distressed owner something that selling the property or declaring bankruptcy cannot. It allows the owner an opportunity to stay in the game and to participate when market values turn around.

I am proud of the way our team at Remington is responding as we roll-out the Distressed Owner Recapitalization Program across the US.  Through our best brokers we are identifying and helping distressed commercial property owners and developers who can benefit from recapitalization of their existing financing. So much discussion today is about new owners going after distressed properties – how about existing investors?  Shouldn’t we be working for them, too?

The problem facing us is historic. The supply of commercial real estate debt has shrunk dramatically.  Further compounding the liquidity problem is the fact that most commercial banks are not in a position to extend credit to new borrowers because they are struggling to manage their deteriorating commercial loan portfolios. 

The continued lack of liquidity in the system has driven yields to unprecedented levels.  The high cost of funds results in more distressed owners having difficulty refinancing their existing debt. And property values are down significantly. These dynamics create problems for owners when they seek to refinance their properties.

The looming $1.2 trillion catastrophe for the U.S. banking system and economy can be avoided if our industry works together to protect current investors at least to some degree so that they at least will benefit from when the market does eventually turn back up.

If you have questions on how we can help with recapitalizing distressed owner debt, please give us a call in any office and we’ll be happy to help. We’re also starting web seminars beginning next week – please ask if you haven’t received information on these.  Andy Bogdanoff – Chairman, Remington

Much of the news in the commercial real estate industry today focuses on investor opportunities to acquire distressed debt. What about the troubled owners? What relief can be provided for distressed owners?

Remington works with these owners every day and we want to make a difference for them.  Therefore we’re introducing the Remington Distressed Owner Recapitalization (DOR) Program that focuses on helping troubled owners and developers.

The Capital Markets and Structured Finance Groups at Remington are offering daily solutions to the on-going liquidity crisis by providing access to more active funding sources across the capital stack. When combined with espert advisory services, the new program positively impacts owner recapitalization.

1. For experienced owners of existing income-producing properties looking to refinance, the Distressed Owner Recapitalization Program offers access to investors that will purchase the note from the bank at a discount. Owners will continue to make the original paymetns to the new investor and participate in the up side when values increase.
2. For the experienced developer of a partially completed project that needs capital to finish and operate the property, Remington has access to investors that will purchase the note from the bank at a discount, allowing the developer to complete the project and operate the property. The developer will continue to make the original payments to the new investor and participate in the upside when the property values increase.

We look forward to working with you as we introduce this new program in October.

Hello I’m Andrew Bogdanoff - everyone calls me Andy - and I’m pleased to begin reaching out to you to discuss how we help our clients secure financing through an extensive network of capital sources. In my 35 years of industry experience, the most satisfying moments for me have been our ability to change the game for a client - by rethinking, repackaging and finding that one funding source to complete a transaction – when all hope was previously lost.

I founded Remington with the goal of achieving this success for our clients over and over again. The team I’ve assembled is second to none, and so is our access to commercial capital.

Since 1993 Remington has built a successful track record of closing the most challenging debt, mezzanine, and equity capital transactions. We enjoy working on the toughest challenges because sometimes only our team at Remington can get  them done. Our clients receive the best access to commercial capital because we have very strong connections to hundreds of active funding sources across the capital stack.

We develop and execute financial structures that turn problematic transactions into closings. Please give us a call and let us help you secure your transaction. In the meantime, welcome to my blog, and I look forward to discussing topics that will hopefully be of interest to you in your business.

Andy Bogdanoff, Founder and Chairman of Remington