According to Moody's, commercial real estate will continue to decline in value before a long term stabilization occurs and the market begins to recover.

They went on to say that the cash flows for properties with short-term lease structures, such as hotels and multifamily, will likely hit bottom in 2010 or early 2011. The bottom for office, retail and industrial properties will take longer to form.

Moody's says that property values have deflated 42.9% from their peak and expects that the bottom will hit in about two years at a 45-55% decline from the peak.

As a response to this situation in part, the U.S. government recently announced new guidance for prudent commercial loan work outs.

Source: https://v3.moodys.com

The process from being delinquent to special service to a workout depends on the situation and payment history of the commercial property owner and how special servicers’ personnel are presented with the relevant factors.

After examining the financial condition of the commercial property in distress, market conditions, the commercial property owner’s financial situation and other relevant factors, special servicers decide the best workout strategy. This is commonly termed the “expected” outcome.

The major categories of “expected” outcome include a commercial loan modification, extension, foreclosure or a return to current. If the servicers expect the borrowers to be delinquent for a prolonged period of time, foreclosure becomes more likely a result.

Guardian Solutions provides commercial loan restructuring services to commercial real estate owners facing difficult with times cash flow problems, untenable balloon payments and/or the inability to refinance their properties.

Our team will formulate a commercial loan modification proposal to address the issues affecting your property while working with you to develop a personalized business plan to deal with the factors influencing the distressed (or potentially distressed) property.

We will prepare a detailed market and valuation analyses and present the existing and projected economics of your property in a systematic and professional manner in support of your commercial loan modification proposal.

Armed with factual information and a realistic business plan, Guardian Solutions’ mediation staff enters negotiations with the lender to secure the most advantageous terms for you, the commercial property owner, while addressing the concerns of the lending institution.