Lenders/ Underwriters?- Any war stories about a deal gone awry during due diligence?

Any war stories about a deal gone awry during due diligence? How did you overcome them and push the deal towards the finish line and create a win-win solution? 

Real Estate Modeling Course

  • Real-life RE Modeling Tests from actual Interviews
  • Various asset classes including multi-family, commercial and more
  • Huge discount - until more tests and cases added

Comments (12)

May 31, 2021 - 7:26pm

Had a borrower walk on a deal because he would absolutely not agree to a hard lock box.  This was a hotel in Williston, ND during the shale boom, so we wouldn't budge.  The deal was a week away from closing.  To his credit he covered $60k in lender costs, since he was the one who walked. 

Jun 1, 2021 - 10:14pm

Hard Lock Box means a lender controlled clearing account that receives payments directly from the tenants or in the case of a hotel from the credit card processors.  The funds are then transferred to a borrower controlled account as long as the loan is above a preset threshold DSCR or debt yield. Soft lock box permits the borrower to collect rent directly from tenants and then deposit into the lock box account.  Hard lock box gives a lender a faster way to access the rent payments if the property performance starts deteriorating.  

Jun 1, 2021 - 11:48am

Not a lender myself, but buddy of mine told me a retail center deal blew up because the guy had to close on a certain day. He said it was related to the astrological calendar. In all fairness to him, he supposedly mentioned this a 100 times through the PSA and even during the LOI stage. He was adamant about closing that day, but the attorneys and title company screwed up and it got delayed one day. He was very spiritual. Deal blew up and he said only way he'd close would be a year later based on the astrological calendar. Seller was not going to wait so it fell apart.


  • 3
Learn More

300+ video lessons across 6 modeling courses taught by elite practitioners at the top investment banks and private equity funds -- Excel Modeling -- Financial Statement Modeling -- M&A Modeling -- LBO Modeling -- DCF and Valuation Modeling -- ALL INCLUDED + 2 Huge Bonuses.

Learn more
  • Director in RE - Res
Jun 1, 2021 - 7:19pm

I'm a borrower. We had a deal that we we're in DD and were basically closed other than signing the GMP and a few other details, but we knew there was an affordable issue with the city (they wanted us to do 20% affordable, but the plans had been approved for 10% since we were approved before the new law that they passed came into effect). I was running point on the deal and couldn't tell the bank, so I had to keep giving them excuses as to why we weren't sending the few final documents to get the loan closed. This went on for around 4 weeks and I'm sure I we looked like idiots, but finally we thought we had resolution with the city so we came clean to the bank about what had been going on in the background. Then COVID hit and the deal got shelved. 

Fast forward a year, we've brought back the deal, it's costing us ~15% more, we're getting LTC at 60% vs. 65% previously, and we've been sitting on the land for a year. The deal had to get reapproved at committee given the delay and somehow the acquisitions team still thinks this is an 18% IRR...

Most Helpful
  • Associate 3 in RE - Comm
Jun 5, 2021 - 1:26am
Start Discussion

Total Avg Compensation

June 2021 Investment Banking

  • Director/MD (9) $911
  • Vice President (35) $364
  • Associates (202) $234
  • 2nd Year Analyst (113) $150
  • Intern/Summer Associate (97) $145
  • 3rd+ Year Analyst (27) $145
  • 1st Year Analyst (418) $131
  • Intern/Summer Analyst (337) $82