David Lynd Gets Inside $62M Distressed Notes Deal

MIAMI-Easton Lynd Management just bought $62 million worth of notes on distressed real estate assets. The portfolio includes 14 office, industrial and retail properties in Florida, Texas, Illinois, Indiana, New York, Ohio, Maine, and Washington D.C. The total amount of space is 1.3 million square feet. 

The deal marks the fourth major acquisition that The Easton Group has been involved with in the past 90 days—and this isn’t the end. The company has another $100 million of equity available to invest and the ability to close all cash quickly.

GlobeSt.com caught up with David Lynd, president of Easton Lynd, to get inside the deal. Lynd shares his reasons for purchasing the distressed assets, his plans for the properties, and why he thinks now is the right time to buy distressed loans.
 
LeClaire: Why did you purchase this pool of distressed assets?

Lynd: We were able to evaluate each asset in a very condensed timeline and determined that buying the note at our price was a compelling opportunity. Most of the assets have been cash constrained without the ability to pay leasing commissions or TIs. Our strategy is to foreclose and get to the asset. Once we own it we will fix any physical or operational problems and then decide if we should sell or hold. Our management expertise give us the right tools to be effective at creating value.

LeClaire: You say you have another $100 million to invest. Why do you have such a big appetite for this type of products?

Lynd: We feel we are at the low point in the cycle and that there are attractive properties out there that simply can’t refinance their debt position. The ability to foreclose and reset the basis will put us in a good position to either sell the asset for a profit or hold them for the long term.

LeClaire: Why do you believe now is the right time to buy distressed loans/assets?

Lynd: With the commercial space having a shortage of active lenders in the market it creates few options for terming loans. This creates the opportunity for us to own the asset for well under the loan balance. Owning real estate at this new reset basis gives you the opportunity to create profits when rents and occupancies rise in the next cycle.   

LeClaire: What are your plans now for these assets?

Lynd: For now we are in the legal stage where we are going through the foreclosure process. Once completed each asset has a rehab scope and business plan that will maximize the value.

LeClaire: What do you see as the biggest challenge associated with executing those plans?

Lynd: The biggest challenge in the process is definitely the legal risk. You never know when you are going to run up against an unreasonable borrower who can throw the asset into bankruptcy or fails to agree on a resolution. This process varies state to state and you have to have a well thought out plan to effectively handle all of many problems that can arise during foreclosure. The main reason you are getting these notes at basically 50% of the unpaid principle balance is because you are willing to accept this risk and deal with it.