Expect Lender Tussles Over Distressed Assets to Rise with Number of Workouts
Washington Post reports: When an investor utilizes more than one loan by multiple shops to fund a pricy property acquisition, then defaults on the debt, which lender gains control over the property in question?
The answer varies on a case-by-case basis, but a particularly hairy dispute is unfolding in Reston, VA, a Washington, DC suburb over four office buildings originally purchased by Penzance Cos in 2007 for $203 million. The firm defaulted on its loan obligations last year, and now New York-based Garrison Investment Group, one of Penzance’s original lenders, is challenging other firms with debt tied to those properties for control of the 750,000 square feet of distressed space.
Real Capital Analytics’ (RCA) Ben Carlos Thypin remarked of the legal arguments currently being heard in the New York State Supreme Court that Garrison “took over the properties with the intention of holding them,” despite not being one of the asset’s main lender.
With RCA tracking $191.5 billion of distressed properties still outstanding in the US by year-end in 2010, the Washington Post indicated in conclusion that the “Battles between lenders over distressed properties are likely to continue.”
View the full article on Washington Post: Expect Lender Tussles Over Distressed Assets to Rise with Number of Workouts
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Posted by: Nina Turner