Restructuring Commercial Real Estate Loans

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As 2011 begins, many have seen signs of the beginning of the gradual recovery of commercial real estate markets. However, underperforming commercial real estate loans continue to present challenges for borrowers and lenders alike. As borrowers look to keep projects afloat and lenders look to continue to build loss reserves, it appears that the restructuring of commercial real estate loans will remain an important tool for borrowers and lenders in 2011. However, the opportunities for loan restructuring may decrease as lender loss reserves are increased and lender balance sheets are improved, making lenders increasingly willing to pursue loan collateral for underperforming loans.

Loan restructuring may present several opportunities for borrowers, including allowing borrowers to capitalize on historically low interest rates, decrease monthly debt service payments and extend the time for repayment. These and other benefits may allow borrowers to continue to carry projects until commercial real estate markets improve or sale or refinance opportunities are identified.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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