Commercial Loan Workout Firm Completes Settlement with National Real Estate Company.

San Diego, CA (PRWEB) December 28, 2011 — Breakwater Equity Partners, a consulting firm specializing in commercial loan workouts, announced today its completion of a multi-million dollar settlement with Grubb & Ellis Inc., a leading real estate company, and Lexington Insurance over the Met Center 10 property in Austin, Texas.1 After uncovering an alleged undisclosed structural flaw in the 345,000-square-foot office building, the owners and Breakwater Equity pursued legal action against Grubb & Ellis, its insurers, and other parties to achieve the settlement on behalf of the tenants-in-common investors (TIC). Proceeds from the $7.785 million settlement are earmarked to repair the property and restructure the loan.1, 2 Continue reading “Breakwater Announces Multi-Million-Dollar Settlement with Grubb & Ellis Real Estate” »

Did you know that losing a commercial property in foreclosure means that you will most likely also have to pay income taxes as a result?  Sounds illogical and most investors are shocked to learn about it.  But careful planning can help to at least minimize this additional insult. This article explains how property sales, loan modifications and investment losses are treated for tax purposes.

Continue reading “TAX CONSIDERATIONS WITH PROPERTY SALES, FORCED SALES & LOAN MODIFICATIONS” »

A recent article in the Wall Street Journal* placed a spotlight on the role of “middlemen”, or special servicers as they are known in the CMBS loan marketplace.  It described how high profile investors such as Andrew Farkas and his Island Capital Group recently bought special servicer C-III, and how Fortress Investment Group, which purchased CW Capital, are seeking to profit by purchasing these special servicers, thereby getting a “front row seat,” to distressed commercial real estate assets sold at auction, a scenario that many view as replete with conflict of interest issues.

CMBS loans are securities backed by pools of commercial real estate mortgages and which are administered by master servicers.  When a CMBS loan goes into default, the master servicer passes the loan to a special servicer, which is charged with working out loans on behalf of the investors who bought the bonds.  On the one hand, the special servicers are supposed to represent the interests of the bondholders.  On the other, the same special servicers have the right to buy the distressed asset as long as they pay a fair market value.  Hence, the conflict. While the article goes on to focus on conflicts within the CMBS investment marketplace, the impact will be felt by CMBS borrowers as well.

Continue reading “Investors Looking for Distressed Real Estate Deals Are Purchasing Special Servicers” »

We’ve been writing about San Diego developer Malcolm Davies and Breakwater Equity’s successful commercial loan modification on a broken construction project in downtown San Diego. It’s a great case study because of the tough situation they were in and the fact that the bank was not budging on their position, making the prospects of a successful workout slim.

Malcolm was interviewed this past week by the Real Estate Guys Radio Show, one of the most popular real estate radio shows and podcasts in the country. Each of these interviews and articles listed below reveal new and interesting insights into the market we are in and what it takes to work with the banks.

Continue reading “Real Life Commercial Loan Modification Story: Real Estate Guys Radio Show Interview With Malcolm Davies” »

There was a great article last Saturday in the San Francisco Chronicle about the necessary role of workout firms in helping distressed commercial property owners.  Breakwater Equity was featured as a workout firm that recently helped Peacock Gap, a well-known golf course client in the Bay Area.

Here is an interesting from the article by Ben Thypin, senior market analyst at research firm Real Capital Analytics:

“During boom times, commercial real estate owners and developers took out financing without realizing what they were getting into and what their rights or recourses were if things went bad,” Thypin said. “A commercial finance is very complex; there are often multiple loans, multiple stakeholders. To have someone who knows the market well and works on behalf of the owner puts them in a better position to negotiate a settlement that benefits them as much as possible.”

The article goes on to outline a case study of Peacock Gap, which Breakwater helped cram down from $12 million in loans to just $3.4 million, a 71 percent reduction.

Here is the link to the article. We would appreciate any comments you might have in the comments section below the article.  There are a number of uninformed readers commenting that don’t understand commercial real estate or the workout process and it would be great to add a more sophisticated dialogue to the mix.