Beware. Rather than “extend and pretend,” special servicers and bank asset recovery groups may have no qualms today about moving to take back underwater properties if they do not see satisfactorily improved circumstances in future.
“Where the property is fully leased but it was over-levered to begin with or because the rents have dropped and there really is no near-term prospect for the rents to rise, we will liquidate, as the situation will not get any better than it is today. There is no reason to (extend the loan),” explained E.J. Burke, executive vice president & group head of KeyBank Real Estate Capital and Corporate Banking Services. Burke was referring to CMBS loans under special servicing.
Read more...Special Servicing: How Likely Are Loan Extensions Today? | Commercial Property Executive
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