Working with a hotel owner in NYC who is trying to refinance his current CMBS loan and sell equity in his hotel at the same time with a participating mortgage. The problem is his defeasance on his current loan is very high right now, so a prepay wouldn't make sense.
Anyone know if there's a way to work with the special servicer to reduce the defeasance payment? Or are they non-flexible on that?
| +82 | LP coming into deal at higher land basis. How to model returns to GP? | 18 | 16h | |
| +76 | Increasing RE Industry's Cash Compensation, Collectively | 43 | 15h | |
| +72 | Major Decisions | 13 | 1d | |
| +28 | Niche down to an operator or stay an allocator | 9 | 3d | |
| +24 | Breaking into CRE late 20s | 7 | 4d | |
| +23 | Thoughts on joining an early-stage REPE fund | 7 | 14h | |
| +22 | Self Storage ECRI | 9 | 2d | |
| +20 | Doom Loop or Creative Urban Reemergence? | 3 | 6d | |
| +19 | How to get good at RE Modelling? | 16 | 3h | |
| +18 | 3 Hour Condo/Rental Excel Test - What Can Be Expected | 2 | 4d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
They may make exceptions for a distressed asset which they are trying to offload but typically there really isn't a way around it.
Yes, if it's due to hardship then the the Special Servicer may be willing to make an exception.
If I'm not mistaken, a certain percentage ( ~10%) may be paid down without penalty. It may be specific to each loan.
It always surprises me how many people borrow millions and millions of dollars without reading the documents
You will only have a very slim chance if you basically say "I'm either giving the hotel back or I prepay the loan and the only hurdle is I cant pay the entire defeasance cost" You'll have to have a very good reason on why you cant wait for maturity (running at 20% because of COVID may be good enough). The servicer will ask "so whats going to happen if we say no" and if the answer doesn't involve significant financial impact to their loan the answer will be no.
Cutting a deal on defeasance is very rare, without a doubt a special servicer will want to see the borrower come out of pocket for whatever defeasance is left over, they likely will not give relief if its 100% refinancing proceeds towards the payoff + defeasance and the borrower doesnt want to come out of pocket.
Actually working at a special servicing shop now and you'd have a very slim chance. Our job it to protect the trust and ensure they're getting as much as possible not to help the borrower prepay and avoid yield maintenance. That said with covid we are giving borrowers relief but they have to show need and it's primarily in the form of 3-6 month payment deferrals. Depending on the asset/situation for hotels we might consider letting them use reserves to pay debt service and in rarer cases opex at the property. Who’s the named special servicer on the loan?
I believe it's Midland Loan Services PNC.
Now that we've reached the 6 month mark, what's your stance on your previous answer? When's the blood spilling? How many assets are being taken away for loans you are servicing?
Still no DPOs, but we are starting to take a fair amount of keys.
Id in asperiores praesentium atque in cupiditate. Alias consequatur qui pariatur est voluptas assumenda. Facilis et voluptas quia aliquid in. Laudantium molestiae non ea odio cupiditate quod. Est accusantium sed consequuntur ullam animi id.
Quis totam non et illum fuga consequatur praesentium. Enim officiis voluptas ipsum et. Velit rerum neque recusandae ea sed est sit. Error ut officiis ut sed omnis eaque. Consequatur possimus atque omnis neque ipsam tenetur.
Aperiam consequuntur maxime aliquid perferendis reprehenderit. Dolore error aperiam sequi deleniti amet ex. Ad consequuntur voluptatem temporibus velit provident eligendi facilis. Illum hic velit suscipit eum.
Porro commodi soluta dolore. Excepturi unde perferendis veniam adipisci autem. Mollitia veritatis consectetur ut inventore earum error asperiores.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...