Upload
gilbert-logan
View
212
Download
0
Embed Size (px)
Citation preview
Turning Around Distressed Properties
2010 North Carolina Affordable Housing ConferenceSeptember 17, 2010Frankie W. Pendergraph, The Pendergraph Companies
What to do?
Drop a Bomb Light some Matches Pray for a Flood Start a War Turn in the keys Hide out in the Caribbean That might be what you want to do but we all
know you can’t do that.
What is the problem?
Figure out what you are dealing with. Financial Distress, Physical Distress or Both? Loan to Value – Rightsizing Compliance Problems? Are you in Technical Default? Are you in Actual Full Blown Default? Is your lender the same that you started with? Read your loan, equity and agency documents!
What is the problem?
Have you been served any legal notices? Are you speaking daily with the IRS? Has the neighborhood gone downhill? Are you the reason the neighborhood has gone
downhill? Has a new property been built in your back yard? Are you in a high insurance area? Do you need to fire the management company?
Assessing the Situation
Assess the problem – look at everything Visit the property Review all documents Look at everything as if it was the first time
you have seen it Ask an independent 3rd party to check behind
you Temporary Problem or Permanent Problem?
Possible Fixes
Loan Restructuring, Modification, New Loan New Site Staff New Management Company New Tenants - clean house Can the property be sold? Can you give the property away? Can you have someone step into your shoes
as the general partner?
Possible Fixes
“You have to spend money to make money”– May have to put money in to turn units to get
tenants in the door Make sure property is valued correctly for tax
purposes Is soft money available? Fix all physical problems as best you can Do everything that you can do, but…
Possible Fixes
Communicate with your lenders and investors. You are not the only one with this problem.
The old school of thought was that the syndicator would bail you out. That is not the case anymore. But they can and probably will be helpful.
Solutions
Everyone put your keys in a hat Put it on Craigslist Maybe your tenants will sue you and they will own
the property and they can deal with these issues There is no easy fix. It will entail lots of attention and
hard work. You cannot expect a 3rd party management company
who is being paid a $25,000 management fee to solve the problem. You as the owner must step up.