During the next few quarters, the increasing volume and value of delinquent retail loans will bring scores of lenders and retail property owners to a crossroads. In February alone, 46 retail CMBS loans valued at $277 million became newly delinquent, bringing the total value of delinquent securitized retail loans to $1.7 billion nationwide, according to Fitch Ratings. Though lenders will likely choose between foreclosure and workouts for the vast majority of distressed retail properties, a small but growing number of lenders are making a third choice: a court-appointed receiver.Specifically, the court appoints a receiver for a retail property or other commercial real estate asset to take stewardship of the asset\u2019s leasing, finances and property management. The receiver may either self-perform those services or retain other consultants to handle them. Estimating the number of distressed commercial properties in receivership is difficult; however, Jones Lang LaSalle Inc., to name one consultant, is the court-appointed receiver for 14 retail assets around the country. Another 20 to 25 potential receiverships are in the firm\u2019s pipeline, estimated Greg Maloney, CEO of Jones Lang LaSalle Retail, who also serves as the firm\u2019s principal receiver. Among other retail assets, Jones Lang LaSalle serves as receiver for Bradley Square Mall, a 335,000-square-foot enclosed regional mall in Cleveland, TN; Martinsburg Mall, a 556,00-square-foot regional mall in Martinsburg, WV; and the 509,000-square-foot Shenango Valley Mall in Hermitage, PA.\u201cReceivership is a good route to take when you don\u2019t want to take ownership of a property,\u201d Maloney contended. When a lender forecloses on an asset, it also assumes the property\u2019s debts, he pointed out. By contrast, when the court places a property in receivership, responsibility for the property\u2019s debts remains with the borrower. When a borrower and lender have reached an impasse over resolving a property\u2019s delinquent debts, the prospect of placing a property into receivership can be enough to bring the borrower to the table. \u201cA lot of times we\u2019re used as a stalking horse,\u201d Maloney explained.A veteran real estate attorney argues that the structure of most commercial real estate loans may limit the number of situations that require receivership. \u201cLenders don\u2019t want to do that except as a last resort,\u201d said Richard Chadakoff, partner & head of the global real estate practice for Latham & Watkins L.L.P. The main reason for the relative scarcity of receiverships, he reported, is that most loans are structured to give lenders control of a property\u2019s cash flow in case the borrower defaults. Chadakoff suggested that receivers are most likely to be needed in cases of less-than-complex loan structures involving assets in secondary markets.<\/p>\n","protected":false},"excerpt":{"rendered":"
During the next few quarters, the increasing volume and value of delinquent retail loans will bring scores of lenders and retail property owners to a crossroads. In February alone, 46 retail CMBS loans valued at $277 million became newly delinquent, bringing the total value of delinquent securitized retail loans to $1.7 billion nationwide, according to…<\/p>\n","protected":false},"author":1314,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[37301],"tags":[],"class_list":["post-1003961899","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"acf":[],"yoast_head":"\n