Salvaging the Economy – Commercial Loan Restructuring

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The U.S. economy continues to flounder and high unemployment numbers appear out of control, but some industrious commercial property owners take matters into their own hands to avoid foreclosure and keep their businesses open.

As the economy stumbles along, Guardian Solutions has become inundated by large numbers of business owners with income producing commercial properties that require loan restructuring to keep their doors open.

The U.S. unemployment rate is nearly 10% according to official government statistics, but what the government fails to clarify is that these numbers do not represent individuals who are not eligible for unemployment benefits and part-time workers who would prefer to be full-time. In reality, with those factors considered, “true” unemployment in the U.S. is closer to 17%.

“With the unemployment rate as high as it is, the last thing this country needs right now is a slew of securitized commercial property foreclosures on businesses that are employing people,” said Jeramie Concklin, CEO of Guardian Solutions, a commercial loan restructuring firm that has been helping it’s clients avoid reaching the foreclosure stage and helping them return back into income-producing assts.

Now add to this already dismal economic situation the fact that commercial real estate industry analysts expect delinquency rates leading to foreclosures to increase further through this year and to peak in late 2011, early 2012. Moreover, Deutsche Bank estimates that around $2 trillion in commercial mortgages are expected to come due within the next four years.

Short of a loan restructuring, commercial property-owners may suffer the consequences of losing their income-producing asset, which subsequently will produce even more unwanted repercussions on the economy. Lending institutions will feel the effects severely if they have nonproducing assets in a market flooded with foreclosed properties, adding to even further illiquidity in the credit markets.

The logical solution is for banks and commercial borrowers to agree on a mutually beneficial modification or restructure. There are various restructuring methods a bank can take. One way is for banks to decrease their rates permanently or temporarily, which can help borrowers avoid foreclosure. A fractional drop in interest rate may eliminate tens of thousands of dollars from a property-owner’s annual debt burden, and potentially, save hundreds of thousands if not millions for the lending institutions because now the property in question has avoided foreclosure.

The point is to give borrowers the time and the tools necessary to stabilize the property and turn it back into a positive-cash-flow business. Doing this allows the lending institution to book the property as a “Performing Asset”. Another scenario is how to effectively deal with the maturation of a loan. Banks might need to extend the maturity dates on loans to push back untenable balloon payments and keep the borrower in business. By doing this, the bank is ensuring the property continues to be a performing asset, not a liability that potentially needs to be sold at auction for an amount below the existing Note.

Because of the technical and legal aspects involved with restructuring a commercial loan, many property-owners may ignore their position and accept foreclosure rather than work proactively to save their investment. Commercial loan-restructuring companies exist, however, and at times can help stressed property-owners navigate the complex procedures, negotiations and nuances associated with a successful loan workout.

Concklin added, “Guardian Solutions addresses each property we represent individually in accordance with all the issues at hand. Once we are prepared with every piece of relevant information and a realistic game plan, we enter negotiations with the Special Servicer, or in some cases the Master Servicer. Our intent is to always secure the best possible terms for the client while simultaneously addressing the concerns of the lending institutions”

About Guardian Solutions:
Guardian Solutions is the one of nation’s largest commercial loan restructuring companies and is committed to helping commercial property owners save their properties. The company’s seasoned team is experienced in a variety of disciplines and able to provide customized restructuring solutions. For more information, visit

Jamie Sene
Vice President, Marketing
Guardian Solutions


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Jamie Sene
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