Lesson Tag: FIN103AIA-AR

Video Time: 4 Minutes

Last Minute Thoughts From Instructors

For distressed investors, don’t be too quick to rush in. Look for a new wave of lenders to come in. We are looking at several quarters of interesting times in the immediate future. There are active lenders out there right now.

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Video Time: 2 Minutes

Dealing with appraisal reductions CMBS loans have the right to go in and reappraise properties. Determining LTV when there are fewer arm’s length trades. What metrics should you rely on in underwriting when LTC is not reliable?

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Video Time: 4 Minutes

Distressed debt investors are looking to buy into partnerships. What are other opportunities in the market right now? In most cases a senior lender is not going to be ok with a borrower using preferred equity to take his chips off the table. Instructors expect a big uptick in these type of deals.

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Video Time: 3 Minutes

If you are taking a PPP loan it is possible to trigger subordinate debt on CMBS loans. CMBS loans carry very complex loan documents. Because of this, they have strict regulations. One of the regulations of a CMBS loan prohibits the borrower from taking on subordinate debt. If the entity takes on a PPP loan that is considered debt and can be construed as a violation of the CMBS loan. Even though the PPP loan is not recorded on the property. If the servicer became aware of it there could be a default triggered. Borrowers should talk to counsel before doing anything on a CMBS loan.

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Video Time: 7 Minutes

Have underwriting requirements changed in the past 4-6 months and are instructors seeing more loan assumptions?

Yes, underwriting requirements have changed, but there is also a more thorough process for looking at numbers before closing deals. Taxes and insurance in Texas must be underwritten. Outside of that, vacancy factor will need to be bumped up as well.  Most of the underwriting changes have really been focused on the borrower.  People are looking at assumptions when properties are under distress.  Typically people are looking at getting new debt because of lower interest rates. 

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