Amid Market Dislocation BH Properties Revives Distressed Loan Strategy

BH Properties plans to revive its distressed loan strategy. The market dislocation has created opportunity to acquire distressed loans, particularly for assets suffering from severe rent loss.

“We have successfully worked in this space in previous cycles where we were able to acquire both debt and distressed portfolios,” Jim Brooks, president of BH Properties, tells GlobeSt.com. “Prior to COVID, we had witnessed changes in the retailing landscape, which had been showing signs of stress as shopping habits had been impacted by on-line shopping creating a surplus of retail space creating opportunities for acquiring and re-purposing retail real estate. The impact of COVID has accelerated that stress with many landlords and owners looking to raise cash through a sale of their loans or real estate given the extra burden of many retailers failing to pay rent.”

The company plans to source deals from lenders overexposed to the retail market, which will likely be looking to sell off the debt. The debt markets have also paused, and borrowers will also have trouble securing debt, both on a refinancing and new financing deals. “The opportunity to provide capital on a risk adjusted basis looks attractive,” says Brooks. “As a result we have and continue to pursue sale / lease back transactions, secured note acquisitions, stalking horse bids and DIP financing.”