NEW YORK CITY- Townhouse Partners, a due diligence firm servicing commercial real estate firms nationally, has seen an uptick in requests for services underwriting risk in loan portfolios amid the current changing economic landscape due to the coronavirus pandemic, also known as COVID-19, David Stern, president and CEO of the firm, tells GlobeSt.com. “We have devoted more resources to surveillance and loan monitoring work. Our clients have asked us to start reviewing their loan portfolios and model out associated risks,” he said.
The main challenge the firm is seeing among clients is their determination to navigate market uncertainty as things change daily, and there isn’t clarity about markets, which could offer a sliver of respite, Stern said,
However, despite the ambiguity clouding the market, and what will happen down the road, lenders are not retreating. They’re buckling their seat belts and working with borrowers to identify the best solutions. “Speaking to some of my lenders, as of today, they are more prone to try to work out some of these loans then want to think about taking them back,” Stern said.
According to a recent GlobeSt.com article, loan monitoring is essential for both the lender and borrower. In order for firms to gauge where tenants are in rent payments and what borrowers need to communicate with lenders informed communication needs to occur on both sides of the coin.
For instance, real estate investment and development firm KAR Properties has New York tenants that are challenged because of the stay-at-home order Governor Andrew Cuomo issued, barring them from operating their businesses.
This has hinged on the cash flow necessary to make rent payments. Now, KAR Properties’ ability to service its mortgages has become compromised because of delinquent rent payments, according to Shahab Karmely, principal of KAR Properties. “We’re working on a case by case basis with our tenants and each case is different,” he said. “Some people are really in need of relief and some use this as an excuse for relief. As far as our suppliers, we are honoring all our payments and keeping that chain alive. We are also paying for services we’re using.”