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Presented by: James D. Zupancic, Esq., CRE with special thanks to:

How Can cre’S add value? Opportunities & Pitfalls With Distressed Assets 2010 CRE Mid-Year Conference Seattle, wa May 25, 2010. Presented by: James D. Zupancic, Esq., CRE with special thanks to: Brian A. Glanville, CRE, FRICS, MAI Integra Realty Resources. No Market

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Presented by: James D. Zupancic, Esq., CRE with special thanks to:

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  1. How Can cre’S add value?Opportunities & Pitfalls With Distressed Assets 2010CRE Mid-Year ConferenceSeattle, waMay 25, 2010 Presented by: James D. Zupancic, Esq., CRE with special thanks to: Brian A. Glanville, CRE, FRICS, MAI Integra Realty Resources

  2. No Market • No Financing/Difficult Financing • Seriously Depressed Values Borrower/Owner Issues

  3. Negotiate with Lender • Extend & Pretend • Chapter 11 Stall • Bank Borrower Partnerships Borrower Solutions

  4. Residential tsunami Warning Signs

  5. FORCE LOCATION • Phoenix • Las Vegas • Florida • San Diego • Bend

  6. Recessions Since WWII • Percent Job Losses and Number of Months after Peak

  7. Housing Prices Since WW II • Housing prices spiked between 2000 and 2007.

  8. Commercial/industrial tsunami Warning Signs

  9. MULTI-FAMILY • Condos Apartments Inventory • First Time Homebuyer Exodus (Incentives) • Consolidation of Households • Concessions • Cap Rates LAND • Underdeveloped or Unsold Lots • Huge Discounts

  10. Real Capital Analytics

  11. Real Capital Analytics

  12. Real Capital Analytics

  13. Commercial Properties in the Recession • Commercial properties have also been profoundly impacted by the recession, as shown by Moody’s REAL Commercial Property Index and NCREIF’s Property Index.

  14. Moody’s REAL Property Index

  15. NCREIF Property Index

  16. WARNING SIGNS • Business Closures + Job Losses = Less Space • Free Rent/Concessions • Vacancy Rates • Values ≤ Debt • Maturities Approaching • Watch for Property Tax Appeal Opportunities

  17. 3 Kinds Of People: • Watch Things Happen • Make Things Happen • Say “What Happened?”

  18. Investors: • Know Your Market (Broker) • Extreme Due Diligence (Legal/Accounting) • Latent Defects • Structural • Title/Liens • Litigation/Bankruptcy

  19. Lenders: • Title/Liens • Advertisement & Sale vs Judicial Foreclosure • Evictions • Become Developers State Registration?

  20. Lenders: • Greater Regulatory Oversight • Lower LTV’s • Real Cash-In/Equity • Underwriting Scrutiny new world of financing

  21. REO Portfolios Swelling • Foreclosures/Deeds-In-Lieu/Developers • Regulators Classifying Assets/Impairs Balance Sheet • Federal Reserve Projects 500+ Bank Failures in 2010 • How to Stay Off the Front Page? THINK “as if” YOU ARE THE LENDER

  22. Borrowers/Tenants: • Some Leverage • What Do They Bring? • Banks/Owners Do Not Want Property • Act Professionally/Act Promptly • Deals Can Be Made

  23. TOMORROW….

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