Deal of the Month

NOVEMBER 2015

Maturities

Instead of highlighting ONE deal of the month for November 2015, we decided to showcase a consistent THEME of deals we resolved in the month of November.


Deal of the Month

Principal Balance of the Loan:
$30MM

Late Fee:
$1.5MM



Challenge

In all cases, these borrowers had secured new financing to pay off their existing CMBS loan, even though in many cases, the property was highly leveraged.  Most of these loans matured in October or November 2015. When an original payoff statement was issued prior to maturity, the borrower and his new lender determined the exact amount needed to pay off the loan.  The new loan was then ready to fund and an updated payoff statement was requested. When the new payoff statement was received, it included a 5% late fee on the entire principal balance of there loan.  One of these loans was $30MM, so the late fee was $1.5MM!  Now the borrower was in a situation where they could not pay the loan off because there wasn’t enough funds to cover the highly leveraged loan, new loan fees and now the late fee.


Solution

Fortunately, in all the cases we handled in November, the special servicer agreed to reduce the late fee to a point where the borrowers could pay the loan off. That will not always be the case and it took serious negotiation. If you are a borrower reading this and have a maturing loan, beware of these late fees!

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