News
At Your (Special) Service
June 23, 2010
| Thompson & Knight partner Mark Weibel speaks CMBS. We know it's not a foreign language, it just feels like one. He launched the firm's new Capital Markets Practice Group last month and it's already swamped with projects. | |
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| “Distressed debt dominates,†Mark tells us. Many CRE loans are in default and for the first time since the CMBS system started in 1994, the default rate is above 10%, he says. No banks are loaning right now and the transfers from master servicing to special servicing continue at a brisk pace. The new division's goal is to help the special servicer get the highest net present value recovery for the collateral when looking at all the alternatives: “That's a very complicated equation to solve and there are potentially catastrophic tax consequences if you make a mistake.†No sweat, right? | |
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| Mark, left, spoke yesterday at our Bisnow Houston What's Up in Capital Markets event with Goldman Sachs Commercial Mortgage Capital co-CEO Roddy O'Neil and Prudential Mortgage Capital's Paul Geyer, among others. His hypothesis: hundreds of billions of dollars in loans are maturing making it (possibly) a great time for new loan originations. Right now default transactions are coming at an increased rate, he said, noting that one of the many challenges facing special servicers is establishing fair value under the pooling and servicing agreement, figuring out the relationship with borrowers and then determining the resolution strategy. “The rating agencies will tell you that, historically, resolution time is roughly 11 months, but it's more like 20 months,†he said. |
