Overleveraged Property Strategies

With the market downturn, owners may owe more than the property’s current value. Strategies to survive in the short term may be considered:

Raise Capital – Raise more capital by bringing in a partner to pay down debt and strengthening the balance sheet.

Renegotiate Debt Terms- Lengthening debt terms or interest rates. Some lenders may even consider partnering by owner selling debt in exchange for lender equity stake.

Bankruptcy Protection- Consider the decision to foreclose and filing for bankruptcy protection. This could be based on whether debt was secured through owner’s personal guarantee or not.  

Increase NOI- Reduce operating expenses through better building efficiencies and increase occupancy with flexible terms, to attract tenants.  

Source: Harbor Stone Advisors Commercial Group