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07. Commercial Shopping Center

SITUATION:

The LLC owned and managed a shopping center with a high vacancies and declining rental rates. The Note was entered in June 2007 with an original principal of $4,400,000 and a maturity in June 2017. The indebtedness at maturity was just under $4,000,000. The geographic region of the property was particularly impacted by the recent recession resulting in high unemployment rates, a sluggish economy, and a bleak outlook for the retail shopping center market. The severe market downturn greatly devalued the asset leaving no reasonable expectation for any meaningful improvement in the near future. The LLC was unable to meet debt service with financial reflecting the property was only marginally able to break even. Additionally, the property was in maturity default and given its financial condition, was unable to get refinancing.

WHAT WAS DONE:

The mitigation team was able to successfully negotiate a discounted purchase of the note, including the assignment of the mortgage and other security interests of record held by the bondholders for a total amount of $1,150,000, a substantial reduction from the amount due and owing on the note.