You have a great development, a great developer, but too muchdebt—a relic of boom times—with no hope of finishing the job andhaving it make economic sense.
Not long ago, this combination would have pointed straighttoward foreclosure, litigation and a multi-year disaster. Morerecently, struggling developers, cash-rich investors and realisticlenders have worked out a better solution.
The investor, perhaps with a new lender, buys into the deal at aprice that makes sense today. Most of that new money goes to payoff the undersecured original lender at a discount. The rest goesto critical vendors and restarting the project. The developer staysin, with a monthly development fee for their expertise, attentionand name recognition value.
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