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Distressing Situation

Massive amounts of capital are poised to pounce on billions of dollars of distressed debt. It has been the long awaited opportunity for investors to reap hefty returns and for real estate workout specialists and consulting firms to get off the sidelines and back to work. Well, the anticipated flood of bad debt and foreclosed properties may not happen. In Saturday’s Wall Street Journal, tucked-away on the bottom of the Money and Investing section, it was reported that federal bank regulators have just issued guidelines allowing banks to keep loans on their books as “performing” even if the value of the underlying properties has fallen below the loan amount. The guidance, issued by the FDIC, Office of the Comptroller of the Currency, and the Federal Reserve will allow examiners and financial institutions to work with commercial property owners who are “experiencing diminished operating cash flows, depreciated collateral values, or prolonged delays in selling or commercial properties”. With the banks’ restructuring loans, the transactional grease from properties being dumped on the market at fire sale prices isn’t going to happen, leaving the distressed funds and brokers to find something else to do–at least for the time being.

Tony LoPinto is CEO of Equinox Partners, an executive search firm specializing in the real estate industry, and parent company of SelectLeaders. The views expressed in this article are the author’s own.
Job Opportunities
SELECTLEADERSVice President, Property Management–Distribution Facilities(ANNAPOLIS, MD) The VP’s primary responsibility will be for property management and tenant relations of a $500-million portfolio of approximately four million square feet. The position entails the management of a current three-person team of senior property managers, as well as hands-on participation and demonstrated leadership in property inspections, property expense processing, property level reporting and budgeting, interfacing with accounting personnel, tenants, NATM senior management and partners; among other duties.

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