Loan restructurings with principal reductions on rise
Special servicers are increasingly agreeing to large principal reductions for debtholders at distressed commercial properties, the Wall Street Journal reported. The trend makes investors in commercial mortgage-backed securities tied to buildings that are underwater hopeful that the refinancing struggle to come could be less bleak than observers had previously predicted.
For instance, the owner of two distressed suburban office building on Long Island, a complex known as the Fountains at Lake Success, at 1981 Marcus Avenue in Lake Success, NY, recently brokered a deal where its servicer, LNR Property, took $83 million to pay off a $110 million loan. The owner, New York-based real-estate investor Craig Koenigsberg, had to agree to put $12 million into capital improvements in the deal, and brought in a new equity partner, Rockpoint Capital, who now have a majority stake in the building. [WSJ]
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