Asset Management and Disposition Strategies
For experienced equity buyers of distressed commercial loans, and those that have in-house or outsourced asset management services, this webpage will be of little value. This webpage is directed to Equity Buyers whose past experience has been limited to acquiring real property assets, but have little to no experience in acquiring distressed commercial loans.
Below are the four basic Asset Management and Liquidation strategies when buying distressed commercial loans:
- Non-Performing: Foreclosure and Own and Operate.
In this scenario, the purchaser of the non-performing loan note, would file (or follow-through with a previously filed) foreclosure proceedings against the property owner. After foreclosure, the Note purchaser would then hold equitable title to the subject property and manage the asset according to its original intended use or re-construct commercial property for a new use. After the foreclosure, all other liens in Jr. position to the 1st Trust Deed note, would be deleted from title.
- Non-Performing: Deed-in-Lieu and Own and Operate.
In this scenario, the note purchaser negotiates with the property owner to have them Deed the property to the note purchaser in order to avoid foreclosure. Typically the note holder will also offer the property owner a cash incentive to cooperate with this proposal. Jr. Lien holders, if any, would still have secured lien attached to the property in this scenario.
- Non-Performing: Foreclosure/Deed-in-Lieu and Re-sale.
As described above, the note purchaser would take ownership to the commercial real estate. Then the newly obtained property, would be immediately resold if appropriate, or the property could be rehabilitated and then resold.
- Performing: Loan Modification and collect payments.
For performing loans, the note purchaser can elect to negotiate new loan terms with the property holder, and than have loan serviced and collect payments.
For member equity investors that do not have a tested Asset Management exit strategy, or for clients that want to add to their existing exit strategy program, CRE Note Exchange offers “cradle to grave” asset management on select commercial loans. Our experienced asset management staff will negotiate and liquidate assets using creative disposition techniques to maximize yield and minimize risk. For more details, contact CRE Xchange.
SVP of Asset Management