This article appeared in the May 2025 issue of American Law Institute Continuing Legal Education's The Practical Real Estate Lawyer.
Sheppard partner Richard S. Fries explains how lenders and borrowers are approaching non-recourse commercial real estate loans in distress, from loan modifications to foreclosure, deed in lieu arrangements and distressed loan sales. It also discusses right-sizing as a practical alternative—splitting debt into tranches and tying repayment to cash flow and discounted payoff windows.
- Distressed valuations can eliminate equity and push performing loans into default
- Traditional workouts trade time and concessions for covenants collateral and releases
- Foreclosure deed in lieu and loan sales offer exits—but at cost
- Right-sizing splits debt into tranches and ties repayment to cash flow
Read the full article here.