SCOTTSDALE, AZ - "The commercial real estate industry is a disaster waiting to happen," said Andy Bogdanoff, founder and chairman of Scottsdale-based Remington Financial Group, a leading capital services company. "With U.S. banks in a deep and continuing liquidity crisis and with $1.2 trillion in commercial debt due to mature by 2013, thousands of real estate owners and developers across the country will soon find themselves between a rock and a hard place when their loans mature," Bogdanoff told a meeting of industry representatives. Bogdanoff, who has been in the financial services industry for 35 years, founded Remington Financial Group in 1993.
"Even if bank liquidity weren't an issue, estimates are that two-thirds of the securitized loans and half of the whole loans due to mature between 2010 and 2013 would not qualify for refinancing due to today's more stringent banking standards," Bogdanoff said.
Bogdanoff added that the unprecedented high cost of funds, coupled with a 40% decline in real estate values since 2007, further compounds the problem. "With property values less than the original debt, thousands of owners and developers may have no choice but to sell their properties at a loss or face bankruptcy when their loans mature. If the problem isn't solved soon, the result could be a disaster for the commercial real estate industry and the U.S. economy as a whole."
Bogdanoff told the group he believes recapitalization with private capital sources can help many of the nation's distressed real estate owners and developers. To assist distressed owners, Bogdanoff introduced a new recapitalization program that bypasses traditional banking sources. "This program is aimed directly at distressed owners and developers," Bogdanoff said. "For those unable to refinance loans, we can tie together the expert capital advisory services of Remington with access to hundreds of active private funding sources ready, willing, and able to recapitalize troubled commercial real estate assets across the capital stack."
An early recipient of funding in the new recapitalization program by Remington is a Michigan-based recreational vehicle park that required property upgrades in order to reverse declining sales. Despite adequate cash flow and a solid financial history, lenders refused to refinance the maturing loan because declining property values caused a loss of equity. Acting as financial adviser, Remington creatively restructured the distressed owner's business plan in such a way that it could successfully tap into its extensive network of private lenders and investors. Instead of having to sell or declare bankruptcy, the distressed owner secured through Remington a $1.58 million SBA 7(a) loan priced at prime plus 2.5%, with 90% LTV (loan-to-value) and amortization over 25 years.
"This is just one example of how creative financing expertise combined with access to private capital can help fill the potentially disastrous gap that is being created in the capital markets by the on-going liquidity crisis," Bogdanoff said.
The Distressed Owner Recapitalization Program by Remington is being expanded this week with a broad introduction to top brokers across the U.S.
Since 1993, Remington Financial Group has built a successful track record of closing the most challenging debt, mezzanine, and equity capital transactions. Our experienced associates specialize in developing and executing financial structures that turn problematic transactions into successful closings. Because of the company's strong connections to hundreds of active funding sources across the capital stack, commercial real estate and general business clients of Remington have access to some of the industry's best sources of commercial capital.
Source: Remington Financial Group