MIAMI—From their windows at the Tampa offices of the Arnstein & Lehr law firm, with all of Downtown Tampa in view, Ron and Vanessa Cohn see the commercial real estate market from different vantage points. And what they see saves their clients plenty of time and money.

Ron, managing partner of the firm's Tampa office, focuses much of his work on working out problem commercial real estate and other commercial loans for lenders and secondary-market investors. His wife, Vanessa, handles closings of new loans for commercial lenders, as well as for buyers and sellers of commercial properties. 

And the two will often work together when Ron, the litigator, reaches a resolution of a foreclosure matter. He then turns the file over to Vanessa to document the settlement and, where appropriate, modify the subject loan.

Many banks are significantly changing their approach to problem loans, Ron says, while more private lenders and investors are entering the marketplace. And with sales activity continuing to accelerate, Vanessa talks about how today's lending environment compares to the overheated pre-recession market.

GlobeSt.com caught up with talked to Ron and Vanessa about the trends they are seeing in the Tampa Bay real estate market in part one of this exclusive interview. Be sure to come back to this afternoon for more insights.

GlobeSt.com: How is the makeup of lenders changing, and how is that impacting your work with resolving problem loans?

Ron: More private commercial real estate capital providers have been getting into the market to fund their own projects, while many are also buying and servicing existing loans made by more traditional lending institutions. This is helping more deals get funded.

At the same time, rather than incur the expense of litigation, many banks are selling more and more of their problem loans to private investors. These private companies often have more flexibility in how they handle such loans, because the regulatory pressure on these investors is much less than on institutional lenders.

I think this trend is allowing banks to be a bit more aggressive in their real estate lending, knowing they can sell a loan if it becomes a problem. And that is helping fuel the continued rebound of the real estate market in west Florida.

GlobeSt.com: As you work out problem commercial real estate loans for lenders, what are the keys to success?

Ron: Certainly, litigation and loan workouts can be stressful. That said, while we are always moving our matters forward through the litigation process, we focus on finding a collaborative business solution whenever possible. In my experience, such a resolution is usually optimal for all parties. 

If this approach is successful, the lender gets paid all or most of the obligation, the borrower often stays in business and its employees keep their jobs. Rather than taking the purely “bulldog” approach, which often results in significantly higher legal expenses for the client, we make it clear to the borrower and its counsel that we are open to discussing any reasonable business solution. 

Where the borrower is receptive, we start by taking the time to listen to the borrower's story, and then see what they might offer as a reasonable solution. Often, this approach can cut through the fear and mistrust that defaulted borrowers often have, so they can focus on the business problems that caused the default instead of reacting to the situation on an emotional level, which can often lead to protracted and expensive litigation for both parties.   

This approach also often results in far lower legal bills for clients. When the parties are willing to talk to each other, this can go a long way towards making the best of an adversarial situation. Of course, it is critical to also keep the litigation process moving forward until an actual agreement is reached, signed and approved by the court, as that serves to keep the borrower focused on the problem and, in those situations where there is no reasonable hope for a workout, we can liquidate the collateral quickly and efficiently.

GlobeSt.com: Is the Tampa Bay real estate market coming back in all segments, from what you are seeing?

Vanessa: The market is vastly improved across the board. We are seeing more access to capital for deals as private real estate investors are making a major impact. New private equity coming into real estate projects creates revitalization of the acquired property.

Also, we are seeing more foreign buyers looking at the Tampa Bay area. Some of these foreign buyers are telling us that it's become difficult to find opportunities in South Florida, where sales have been extremely brisk for a while now, so they are looking to Florida's west coast.

Be sure to come back to this afternoon's Miami edition, where Ron and Vanessa will discuss their views on a return to some of the irrational exuberance of the pre-recession market and more.

 

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