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: Sperry Van Ness|RealSite Commercial Group