3 Steps To Reduce Risk and Maximize Value During The Sale Of A CRE Loan Portfolio

In 2025, many CRE investors expect revenues to pick up after two years of turbulence compounded by rising interest rates. However, the almost $1T of loans due to mature next year suggest that many in the sector will still be facing challenges.

Banks have experienced their own challenges when it comes to CRE with many being forced to offload CRE loans as values have dropped. Faced with potential hurdles, lenders keen to sell a loan portfolio need to find ways to both reduce risks and maximize values, said Jennifer Cleare, senior director of strategic advisory solutions at real estate lending and investing solutions provider SitusAMC. 

“The high volume of loan maturities presents both opportunities and risks for lenders,” she said. “In this environment, it’s more important than ever to be diligent about how information is presented and be transparent about what is on offer.”

Bisnow asked Cleare about the three steps a lender should take to get their books in order and maximize the proceeds of loan sales.

Step 1: Get Your Data In Line

Data aggregation and normalization are the most important starting points, Cleare said. It’s common for loan information to be spread across multiple systems that don't integrate or are even stored by a third-party provider. If a lender works in several regions, each team might have its own way of structuring data.

“Many banks don’t have a centralized system, which can make standardization a slow process,” she said. “But it is worth doing well. A buyer could easily be put off when faced with a gap in information, too much irrelevant data, or worse, errors.”

Once data is collected, it is possible to create a clear picture of all aspects of a loan for a potential bidder, Cleare said. Third-party support, such as services offered by SitusAMC, can help to extract the most pertinent information from documents, which mitigates the risk of errors and inconsistencies. 

“We have seen examples of what can happen when a lender doesn’t put the time into collating information effectively,” Cleare said. “They’re flooded with time-consuming questions about loan processes and risk rating policies. If you present this information clearly up front, the whole project will run more smoothly.”

Step 2: Translate Procedures So All Buyers Understand

The way banks and lenders interact with borrowers and portfolio managers varies widely, even though they must all adhere to federal and state regulations. If processes are not understood by all stakeholders, a sale can be complicated or even disrupted, Cleare said.

SitusAMC works with banks to scrutinize their policies and procedures, bringing in knowledge of wider industry processes. 

“It’s crucial for us to understand our clients’ ways of operating right from the start,” Cleare said. “We can help to bridge the gap between their internal processes and what a potential buyer might expect. By making communication clearer this way, the overall sales narrative will be far smoother.”

Step 3: Carry Out A Full Review Of The Loan Portfolio

Many factors can impact the position of a loan portfolio. Wider factors, such as interest rate fluctuations, sit against more local challenges like potential tenant defaults. 

“The job of our team is to identify the major risks and adapt a lender’s strategy to mitigate appropriately,” Cleare said. “We look at the performance of individual loans and assess future risk to help lenders optimize pricing and structure the offer effectively.”

SitusAMC’s work with clients includes analyzing the maturity schedule of loans to create the most effective repayment plan. The team investigates how likely it is that loans will be paid off or moved to special servicing, which is all crucial information to create an accurate asset valuation, Cleare said.

“If a portfolio includes a lot of office assets that are sensitive to market changes, for example, we can advise on the best way to reduce loans or dilute office exposure,” Cleare said. “It all comes down to understanding the individual loan book and end goal. Our approach is always to focus on long-term client satisfaction.”

This article was produced in collaboration between SitusAMC and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.