• Idaho Commercial Real Estate Company

  •         
  • Boise, Idaho   208.515.2068
Search by type Search Listing
Newsletter Signup:
Stay on top of the latest
news in commercial real estate
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.
  • 2
    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.
  • 2

    For two decades, Sperry Van Ness has differentiated itself by pursuing every opportunity to deliver better results to our clients.
  • 2


    35 Years of Commercial Real Estate Experience

Clients


Case Resolution:
  • The Lender countered with a Discounted Payoff of 55% of the loan amount with was accepted 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 the Lenders potential need to fund operations, pay real estate taxes, and carry the Property during a foreclosure process.

Case Study - Discounted payoff of a distressed loan secured by a suburban office building - CMBS work out

  • Situation:
    • The Property is a 50,000 square foot Class B Office Building that was constructed in 1996.
    • The Borrower has been a developer / owner / manager of office buildings for 20 years and owns multiple properties in the area.
    • Lender originated the loan in 2005. At the time, the Property was 95% occupied. The market had a vacancy of 10%.
    • From 2004 to 2008 there was a 35% increase in new office supply added to the market. Only 35% of the space in the new supply was preleased.
    • With the collapse of the financial markets in late 2008, demand for office space stopped with many businesses closing their doors and walking from their leases. The combination of the unoccupied recently constructed space, as well as space that was available for sublease increased the market vacancy to 30% by the end of 2009.
    • 50% of the leases at the subject property, were expiring in 2010 – 2013 and the current rents were 20% higher than current market rents for newer space.
    • Several leases in the subject property expired in the first half of 2009 that lowered the buildings occupancy to 75%.
    • The reduction in income from the vacating tenants and the decrease in reimbursed expenses, resulted in a 30% reduction in net income and required the Borrower to fund $100,000 in Debt Service Shortfalls through August of 2009.
    • The Borrower engaged R.W. Kline Companies in September 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 October requesting that the loan be transferred to the Special Servicer for Modification which occurred in November of 2009.
    • After funding significant Debt Service Shortfalls throughout 2009, the loan went into default in December of 2010. December of 2009 and was transferred to the Special Servicer in January 2010.

  • Resolution Considerations:
    • During the time of default with the 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.
    • While the Property was in good condition, the current rents at the building were above market and the quality of the building was inferior to the current available supply. In addition, there was very little demand for space with concessions and significant tenant improvements required for new leases and renewals.
    • With the decrease in income, the Property was having a difficult time covering operating costs.
    • 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 carry the operations, pay real estate taxes, and enhance the building to keep its current tenancy, let alone attract new tenants.
    • On behalf of the Borrower, R.W. Kline requested that the lender consider a Discounted Payoff of the loan at an amount equal to 50% 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 Property was 45% of the current loan balance. In addition, the lender obtained brokers opinions of value that indicated a value of 62% of the loan amount was appropriate. All of the broker opinions of value were based on projected revenue and included absorption estimates that were not presently being realized in the market.
    • The Property was located in a non-judicial Foreclosure state that would have provided the appointment of a receiver and a 90 day Foreclosure period should the lender elect to foreclose.
    • The lender solicited the Brokers that had provided the opinions of value for potential buyers that would actually buy the Property after foreclosure. The Brokers could not produce any buyer willing to pay more than 55% of the current loan balance.
    • The Lender estimated that the marketing and legal costs of a foreclosure process would cost at least 10% of the ultimate sales price and from prior experience knew that the sale of a foreclosed property taints a property’s value.

About Us Services Properties Contact Us
Our Team SVN/JCI Difference Testimonials

Commercial Real estate listings

Commercial Real Estate Idaho Office. 208.515.2068

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