Real Estate

Real Estate | September 2024

Overleveraged Real Estate Is at a Tipping Point

Something happened in 1991 that, ever since, drove a bull market in just about everything. No assets rode that bull better than commercial real estate. But what if that bull is back in its pen, and will be there for a long time? If so, the nature of 30-plus years of commercial real estate investment just changed. What may seem to be evolving is, in fact, here and now. The change has happened. What is still evolving is the reaction of a massive market built for something different.

Section 365(l) – Landlords’ Underutilized Remedy

Section 365(l) of the Bankruptcy Code (“section 365(l)”), which entitles a landlord to “require a deposit or other security for the performance of the debtor’s obligations under the lease substantially the same as would have been required by the landlord upon the initial leasing to a similar tenant” when a tenant seeks to assume and assign a lease, is an important landlord protection, yet it is one that seems to have been underutilized by landlords facing lease assignments.

When Will I Get Paid? Unpaid Post-Petition Rent and Subchapter V

Subchapter V presents interesting challenges for landlords, including increased uncertainty regarding the timing of payments. Specifically, 11 U.S.C. § 1191(e) allows certain debtors to extend the payment of administrative claims over three to five years, rather than requiring payment of all administrative claims in full upon the effective date of a plan. [1] Currently, no precedent exists on whether a debtor can extend its payment of post-petition rent as an administrative expense under 11 U.S.C.

Commercial Real Estate Market Outlook

Commercial real estate continues to be the sector to watch for restructuring professionals, as decreasing property values and increasing interest rates will be colliding with $1.5 trillion of debt maturities over the next four years. This informative program will provide a clear and comprehensive understanding of where the market stands and may be going as we head into the last four months of the year. Where are we in the current economic cycle? How have higher interest rates impacted the commercial real estate market this year, and what will the ramifications be next year?

1111(b) Wizardry

This panel will discuss the § 1111(b) election in modern times. It’s not the rule against perpetuities, but it’s also not as simple as your basic loan default. Do you know how to analyze whether making the election makes sense? Perhaps more importantly, do you know how to counsel your client through the process?

Real Estate Implications of COVID-19 on Senior Living Business Models

The senior living sector, already stressed prior to the pandemic, has been upended by COVID-19. This panel will discuss the effects that COVID-19 has had on operational and financial performance, business models past and future, and the real estate valuations of senior living facilities. The panel will also identify what in-court and out-of-court alternatives exist, and will highlight adaptive reuse opportunities for owners and operators of these facilities.

Non-Monetary Defaults

This panel will discuss what happens when lenders default on paying borrowers for non-monetary reasons, such as covenant or compliance violations on real estate loans like debt-coverage-ratio violations. The lenders’ goal is to regain possession of the real estate for investment purposes and deploy it at higher interest rates. The panelists will discuss the impact and efficacy of this strategy from all angles: institutional lender-side, borrower-side and investor-side.