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Opportunities in the New Reality

Asset Distress & Revitalization

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The global economy is experiencing challenges not seen in decades. A combination of factors - rising interest rates, untamed inflation, continuing supply chain difficulties, soaring insurance costs, and geopolitical instability, among others -  have come together to create a great degree of uncertainty, but also opportunity, across financial markets, property markets, and wide swathes of industry.

As the business community grapples with economic uncertainty, financial institutions and investors will re-assess the positioning of assets, associated valuations, and the sourcing and deployment of capital for new ventures. Consequently, strategic business and legal guidance tailored to the varying challenges and circumstances will be critical for long-term success. Some firms will need to reinvent business models, restructure operations, or discover new areas where they can add value, while others will need strategies to protect existing assets from unforeseen challenges. Still others may find that they need to divest assets or consider bankruptcy.

Bilzin Sumberg can assist with recommendations for making decisions about best options for the future, whether preparing for new risks, restructuring, divesting, or acquiring assets, distressed or not, in the new economy.

The team includes lawyers from multiple disciplines with market-leading business and legal experience focused on:

• Restructuring and bankruptcy, including buying assets out of bankruptcy and defaulted loan sales and purchases
• Loan workouts, including forbearances and discounted pay-offs
• Rescue capital, including preferred equity, mezzanine loans, and bridge loans
• Mortgage and mezzanine loan foreclosures, deeds in lieu of foreclosure, and receivership sales
• REO sales for lenders
• Corporate structuring and joint venture formation, including public-private partnerships
• Alternative lending, including private equity and other opportunity funds
• Real estate, from acquisition and construction to disposition, including adaptive reuse of property
• Land use and entitlements
• Environmental issues
• Tax-efficient structuring
• Litigation and dispute resolution

Corporate Debt: Still Growing, and Still a Concern
Financial Services Watch Blog

As the pandemic began unfolding about a year ago, we wrote about the risk that the high volume of corporate debt might make it the next market bubble to burst. The issuance of corporate debt only accelerated in 2020 compared to 2019, growing by 17% and setting a new record in volume. S&P Global Ratings has predicted that corporate debt issuance in 2021 will remain robust, decreasing by only 3% compared to a frenetic 2020 (which would still be up 14% over 2019 levels).

Click below to learn more about the implications of this continued acceleration of corporate debt issuance brought upon by the COVID-19 pandemic.

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A tale of two markets: Some CMBS players see huge losses, others opportunity

The Real Deal

In today's economic client, foreclosures and loan modifications in the CMBS market - particularly in the hotel and retail market - are becoming more prevalent. More real estate investment firms are considering turning over properties tied to securitized commercial mortgages back to lenders, while banks and other CMBS servicers are increasingly faced with the difficult decision of foreclosing or making serious loan modifications. CMBS debt restructurings are highly complex, with a litany of problems for borrowers, lenders, and bondholders, and particularly for borrowers looking to refinance distressed assets after special servicing commences.

“If the borrower recently cashed out with a refinancing, they will be more likely to hand [the property] back to the lender,” said Suzanne Amaducci, head of real estate at Bilzin Sumberg.

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White Knights or Opportunists? Bridge, Preferred Equity Investors an Option for Struggling Real Estate

"Bridge lenders and preferred equity investors are in line to become the go-to rescuers for property owners, especially hoteliers and retailers that have taken the hardest hit. … Attorneys who negotiate between lenders and borrowers also are seeing an uptick. Bilzin Sumberg Miami partner and real estate head Suzanne Amaducci is looking at more than $200 million in interest for bridge loans and preferred equity. 'People are definitely researching the opportunities,' Amaducci said."

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