Scotsman Guide > Commercial > July 2014 > Department

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Commercial Department: From the Editor: July 2014

 

From the Editor

Try to relieve that distressed feeling.

The market crash that followed the recession left many types of damage for the commercial real estate industry to clean up and recover from. Although recovery has been more gradual than the industry would have hoped for, it has occurred in most sectors. Many indicators even point toward greater gains and a brighter future this year and beyond for the overall commercial market.

But as is the case with any massive cleanup, there are messes left behind that some consider too toxic to deal with. Some mortgage professionals and investors view distressed commercial property exactly this way. Such property, either under a foreclosure order or put up for sale by its mortgagee, is often more difficult to get conventional financing for and offers a host of other challenges in terms of rehabilitation costs, compliance concerns and more.

There is opportunity to be had where others fear to tread, however. Although investors have turned troubled commercial assets into a healthy niche over the past several years, the niche is declining in relation to the total market. According to CoStar, as of this past January, the percentage of commercial real estate sales classified as distressed dipped below 10 percent; in sharp contrast, distressed sales accounted for 35 percent of the commercial real estate market in October 2010.

This issue of Scotsman Guide features several articles that offer important knowledge to help mortgage brokers and lenders take advantage of the financial opportunities available in the sometimes-intimidating world of distressed property. Leading off, Jeffrey Wolfer of Silver Arch Capital Partners explores how bridge lending offers a gateway for mortgage originators and their clients to benefit from distressed properties, particularly in the multifamily and hospitality spaces. Read more on Page 23.

Mortgage professionals with a thorough understanding of the legal and financial nuances of distressed property are likely to have a competitive edge in the niche, making this month’s article by Kelley McLaren of Trigild a must-read. It explains the basics of bankruptcy and receivership, and how these actions affect distressed-asset recovery. Go to Page 28 to get more.

Sometimes private, or hard-money, lenders are the answer for investors who need to act fast in the distressed space but lack the capital to make their move. Yanni Raz of HML Investments discusses how hard money is a valuable tool for originators and borrowers on Page 36.

Of course, not all is distress in the commercial real estate world. Odell Murry of MAI Financial Services Inc. examines the past, present and possible future of two government-sponsored enterprises — Fannie Mae and Freddie Mac. Read more on Page 39. Also, in our Q&A interview, we discuss the strong recent performance of the small-balance market with Randy Fuchs of Boxwood Means Inc. on Page 16.

And just a reminder: For those times when you need to get the latest industry news and trends, don’t forget to visit Scotsman Guide News, which presents the need-to-know information in an accessible and convenient format. Be sure to set a bookmark for ScotsmanGuide.com/News and check back often.


 

Kurt Stephan was editor of Scotsman Guide's Commercial Edition. For questions about this article, call (800) 297-6061 or e-mail articles@scotsmanguide.com.

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