Two real estate fund managers have purchased non-performing loans containing a balance of close to $200 million. This would include loans on 300 commercial real estate properties.
One of the companies is currently managing over $2 billion. This would include recent acquisitions in California and other regions around the U.S. The other fund manager has assets of approximately $113 billion. This includes real estate, credit and private equity. A partner of this company stated that the acquisition was aligned with their strategy "to pursue opportunistic investments involving operationally complex assets in stable and improving markets nationwide."
The purchase of commercial real estate debt involves a great deal of regulation. Any firm engaging in these sorts of acquisitions will wish to speak to experienced attorneys to make certain that all debt is managed properly. This will require counsel from attorneys that thoroughly understand business transactions, debt investments and the real estate market.
Attorneys can serve another purpose as well in these sorts of transactions. Attorneys will be needed who can collect upon judgments for outstanding commercial debt.
This above mentioned venture demonstrates just how much investors are willing to purchase when it comes to non-performing loans. Yet though the market appears lucrative for the purchasing of these loans, it should surprise no one that these debts can go very bad. Firms can win judgments in court to collect on these unpaid loans. However, collecting upon the judgment can prove to be a challenge. Few businesses can afford to stand by and wait for outstanding debts to be paid back that involve millions of dollars.
Source: Reuters, "Hudson Realty and Apollo buy big property loan portfolio," Ilaina Jonas Oct. 1, 2013