Real Estate Professionals Brace for the Next Wave of Commercial Property Defaults and Foreclosures

Share Article

Mortgage Brokers Continue to Search for Solutions as Many of their Clients Struggle with Cash Flow, Pending Balloon Payments and Foreclosure Notices

"...we can create a comprehensive restructuring proposal including strategies for modifying the owner’s current mortgage with the lender.” Said Ira J. Friedman, President of Guardian Solutions.

Over the past twelve months, progress in the commercial real estate market has been minimal. Although some areas have seen a limited stabilization in property valuations, the recovery is not close to the levels needed to adequately meet the obligations of the balloon-payments coming due for thousands of commercial property owners in 2011.

“We are now seeing the consequences of the liberal, sometimes reckless lending practices that took place in the 2005-2007 era,” says Jeramie P. Concklin, CEO of Guardian Solutions, a Florida based commercial loan restructuring firm. “Every day, we come across distressed property owners who are either struggling to keep pace with inflated debt service requirement or facing an impending balloon payment due date for which they cannot obtain refinancing…or both.”

Projections for the commercial real estate market, while more optimistic than 12 months ago, still appear sluggish and universally time-inadequate.

Foresight Analytics, (a division of TREPP, LLC) reported that the nonaccrual rate, or serious delinquency rate, among commercial mortgages reached nearly 4 percent in Q3. This is a new peak for the nonaccrual rate.

Foresights’ analysts noted the increase in the delinquency rate for commercial mortgages as “especially notable”. They further warned that the presently underwater loans, coupled with the historically high amount of maturing loans, will be impacting the market significantly in the next several quarters.

Analysts at Foresight went on to speculate that a much improved economic recovery, accompanied by real estate valuation increases, would alleviate some of the pressure on the commercial mortgage sector. However, most analysts and experts foresee this level of distress to be an ongoing theme for an extended period.

The struggles continue for property owners as anchor tenants continue to seek concessions and national chains announced recent branch closures. As more commercial real estate property owners see tenants go bankrupt, downsize or invoke their escape clauses, they have begun to feel the serious effects of the economy.

Although the national commercial vacancy rate appeared to stabilize in the third quarter of 2010, the road to recovery is likely to be very lengthy and gradual. Above-average vacancies and concessions are likely to keep property owners on the fringe for several quarters to come. Without paying tenets, commercial property owners that have little cash flow to make their impending balloon loan payments are forced to face the reality of foreclosure.

However, a growing number of commercial property owners are exercising options to avoid foreclosure. New strategies have been developed that help real estate owners to hedge their assets against additional declines in valuation. Throughout 2010, more and more agents and brokers have heard from clients who were searching for ways to save their assets from foreclosure and help restore them as performing assets.

Guardian Solutions, a commercial loan restructuring company based in Clearwater, Florida, has seen a steady increase in the number of real estate professionals contacting them in hopes of helping their clients. In 2010, Guardian has more than doubled its client base as a direct result of industry referrals.

“Guardian Solutions can help commercial property owners restructure their loans by first evaluating an owner’s asset performance and market potential. From that type of information and other analytical data we compile, we can create a comprehensive restructuring proposal including strategies for modifying the owner’s current mortgage with the lender.” Said Ira J. Friedman, President of Guardian Solutions.

“Armed with industry specific knowledge and working-relationships with many of the nations’ special servicers, Guardian Solutions’ mitigation professionals enter negotiations with the lender to secure advantageous terms for the client, while addressing the concerns of the lending institutions,” added Friedman.

About Guardian Solutions
Guardian Solutions is a focused commercial loan restructuring firm. Guardian works with commercial properties across the United States and is committed to helping commercial property owners save their properties. The company’s experienced professional staff consists of MBA’s, Real Estate Professionals and financial analysts. Each specialized team member is personally devoted to his or her part in helping owners of distressed assets. For more information, visit

Jamie Sene
Vice President, Marketing
Guardian Solutions


Share article on social media or email:

View article via:

Pdf Print

Contact Author

Jamie Sene