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[IMGCAP(1)]LOS ANGELES-The Century City-based real estate investment banking firm of George Smith Partners and law firm Manatt, Phelps & Phillips have joined forces in a new initiative to offer financial and legal advisory services to CMBS borrowers.The two companies describe the new effort as an interdisciplinary approach designed to help clients determine and execute optimal workout strategies with master servicers and special servicers for CMBS loans.

[IMGCAP(2)]For George Smith Partners, the new initiative will be led by Gary M. Tenzer, co-founding principal and senior director, and David Rifkind, principal and managing director. Tenzer calls the new initiative “a proactive effort on behalf of both firms to meet a fundamental need in the commercial real estate industry.” He adds, “In 2009 alone, the wall of maturity on more than $15 billion in securitized loans with major international investment banks is rapidly approaching with no apparent refinancing opportunities.” Tenzer points out that in 2010 and 2011 the maturities grow to $45 billion and $65 billion, respectively.

[IMGCAP(3)]Tenzer says that the new arrangement will combine the real estate finance knowledge and experience of GSP with Manatt’s securitization and workout expertise to provide “complete workout solutions for borrowers facing CMBS defaults.” Clayton Gantz, a partner at Manatt and co-chair of the Distressed Asset Group, observes that as more borrowers are faced with the need to restructure their debt, the key will be “to craft a workout that addresses the challenges of the underlying property, the economic motivations of the players and the contractual limits on the servicer’s discretion.” Partner Adam R. Salis is also heading the new initiative for Manatt.

[IMGCAP(4)]George Smith Partners will assemble both market and property-specific data to formulate a workout plan in consultation with the client, followed by preparation of a written business plan case in support of that plan. The legal team from Manatt will review the loan documents to determine the loan terms and current legal status of the debt. Manatt will also obtain and analyze the securitization documents in order to understand the workout constraints on the servicer, with the goal of incorporating all of this diligence into the final workout proposal.

Finally, Manatt and GSP will work together during negotiations with the servicer and negotiate final workout documents on behalf of the client. The companies say they will explore all viable options, including note modification, refinancing or outright note purchase.

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