• Idaho Commercial Real Estate Company

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  • Boise, Idaho   208.515.2068
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As Idaho commercial real estate broker, Jackson Cooper, Inc. provides state-of-the-art technology, innovative marketing tools, and in-depth research methods to effectively assist clients In Idaho and nationwide through all phases of commercial real estate.
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    An integral part of our success is our unique business model, which creates a competitive bidding environment aimed at producing the highest returns for sellers.
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    For two decades, Sperry Van Ness has differentiated itself by pursuing every opportunity to deliver better results to our clients.
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    35 Years of Commercial Real Estate Experience

Clients


Case Resolution:
  • The Lender countered with a Discounted Payoff of 68% of the loan amount which was accepted by the Borrower.
  • The Lender retained all escrows that were held by the Master Servicer which enhanced their recovery to the Trust.
  • The transaction closed within 60 days of approval with minimal costs to the Trust.
  • R.W. Kline Capital and/or assigns funded the discounted payoff and R.W. Kline is currently servicing for the borrower.

Benefits to the Lender:
  • The resolution provided the Lender with a recovery that provided the highest net present value for the trust.
  • The resolution eliminated a lengthy and expensive legal process.

Case Study - CMBS work out of Distressed Hotel with SVN/JCI and R.W. Kline

  • Overview
    Sperry Van Ness/Jackson Cooper, Inc. (SVN/JCI), in alliance with R.W. Kline, provides immediate underwriting nationwide and disposition solutions to financial institutions and real estate clients with distressed portfolio assets including CMBS loans. The team’s seasoned professionals focus on producing results, driving change and affecting outcomes for clients with commercial real estate interests, as well as assisting lenders in the disposition process. The full-service organization offers loan modifications, note sales, business commercial loan workouts, mergers and acquisitions, restructuring, brokerage services, and land development and management. The case study is on a hotel that recently fell into distress. Both the lender and borrower were able to reach a satisfactory resolution.

  • Situation:
    • The hotel is a 100 room limited service hotel that was constructed in 2006.
    • The Borrower has been a developer / owner manager of hotels for 15 years and owns 8 other hotels.
    • Lender originated the loan in 2007 based on aggressive underwriting standards that were common at the time.
    • The loan was underwritten on the projected performance of the hotel as it was still in its ramp up period.
    • In 2007 and 2008 there were 2 additional hotels / 212 rooms that were completed within 3 miles of the subject hotel
    • During 2009 and into the first 3 months of 2010 the combination of the recession plus additional supply led to a 28% decline in Room Revenue and a 45% decline in Net Income.
    • The Borrower engaged R.W. Kline Companies in October of 2009 to assist them in working with the Lender to seek a resolution to the situation. On behalf of the Borrower, R.W. Kline Companies submitted a Letter of Imminent default to the Lender in November requesting that the loan be transferred to the Special Servicer for Modification.
    • After funding significant Debt Service Shortfalls through most of 2009, the loan went into default in December of 2009 and was transferred to the Special Servicer in January 2010.
    • While the hotel is in good condition, the Brand is requiring that new bedding and Hi-Definition TV’s be in place at the Hotel by June of 2011 or the Hotel will lose its franchise. The cost to meet these requirements was significant.

  • Resolution Considerations:
    • During the time of default with guidance provided by R.W. Kline, the Borrower remitted to the lender excess cash flow and maintained a good relationship with the Special Servicer.
    • R.W. Kline completed an independent assessment of the market, obtained valuations and reviewed the Borrower’s projections of net income over the next three years.
    • Based on the underwriting, it was apparent that there was insufficient future value to justify the current loan balance, as well as the additional costs to comply with the brand requirements.
    • On behalf of the Borrower, R.W. Kline requested that the lender consider a Discounted Payoff of the loan at an amount equal to 65% of the loan balance. This represented an aggressive cap rate on projected year 3 income. To show good faith, the Borrower was willing to provide a significant non refundable deposit and close in 60 days if the Lender approved the Borrowers request. R.W. Kline assisted the Borrower in identifying sources that could provide a loan to facilitate the pay off.

  • Lenders Considerations:
    • Within 60 days after transfer, the Special Servicer obtained a new appraisal that indicated that today’s value of the Hotel was 55% of the current loan balance. In addition, the lender obtained brokers opinions of value that indicated a value of 72% of the loan amount was appropriate. The valuations did not consider the costs that would be encountered by a buyer to secure a new franchise.
    • The Hotel is located in a judicial Foreclosure state that would require the appointment of a receiver and a 240 day Foreclosure period should the lender elect to foreclose.
    • The lender estimated that the marketing and legal costs of a foreclosure process would cost at least 10% of the ultimate sales price and was aware from prior experience that the performance of the hotel under receivership might decline.

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Commercial Real Estate Idaho Office. 208.515.2068

Jackson Cooper Inc., 950 W Bannock Ste. 1100 Boise, Idaho 83702 info@jacksoncooper.com