Practices & Industries: Distressed Real Estate Asset Group

With its broad practical experience in all areas of real estate ownership, development and finance, Luce Forward’s Distressed Real Estate Asset Group successfully develops viable alternatives to best position you and your troubled assets.

Throughout our firm’s history, real estate and financing have been mainstays of our practice. Our troubled asset expertise combines our extensive real estate, finance, securities, tax and bankruptcy capabilities. As one of California’s largest and most well-known real estate firms, our multi-disciplinary team uses a practical approach to resolve complex issues promptly and efficiently.

The members of Luce Forward’s Distressed Real Estate Asset Group have extensive experience in handling all aspects of troubled real estate, including:

• negotiating hundreds of commercial loans with CMBS lenders and assisting clients in negotiating loan workouts in these matters.
• representing debtors and lenders in bankruptcy proceedings and pre-bankruptcy planning.
• assisting sellers and purchasers of real estate assets in bankruptcy proceedings with a team of highly-skilled real estate transactional, land use and bankruptcy attorneys.
• negotiating loan modification and forbearance agreements for borrowers and lenders.
• assisting purchaser of troubled real estate secured loans from financial institutions and government agencies (including due diligence and underwriting analysis of underlying real estate).
• representing borrowers, lenders and purchasers in non-judicial foreclosures and deed in lieu transactions.
• representing lenders in the appointment of receivers and judicial foreclosures.
• representing lenders and purchasers in the development and sale of foreclosed properties.
• providing advice regarding broken condominium projects and other distressed residential projects (including restructuring projects to make them economically viable, and guiding clients through the maze of associated land use, Department of Real Estate and other regulatory issues).
• restructuring Mello-Roos and other public infrastructure bonds affecting distressed properties.
• assessing tax issues such as cancellation of indebtedness income, insolvency and net operating losses.
• representing landlords and tenants in lease workouts and modifications.
• advising landlords regarding tenants that may file or have filed bankruptcy and representing tenants in connection with a landlord bankruptcy.
• representing foreign entities and individuals in the acquisition of U.S. distressed real estate including loan portfolios, properties owned by banks or the U.S. Government and assets of developers.

Representative Transactions.

Loan Modifications and Workouts.

• Currently involved in a workout transaction relating to the restructuring and extension of a $115,000,000 loan secured by a hotel property. As part of the transaction, our client is also obtaining a $15,000,000 junior loan as well as approximately $20,000,000 of additional equity investment.
• Currently assisting a client in a workout of a $60,000,000 loan on a hotel property.
• Represented a borrower in connection with a $40,000,000 forbearance agreement involving a commercial property.
• Workout of 29 mostly real estate secured loans totaling approximately $180,000,000 to affiliated California and Nevada homebuilders, including the negotiation and documentation of discounted payoff agreements and loan sales agreements, loan restructure modifications and new working capital and accounts payable loans to the borrower, handling the foreclosure of several of the loans and representation in the bankruptcies of certain of the guarantors.
• Workout of two related acquisition and condominium conversion loans totaling $60,000,000.
• Workout of A&D and revolving construction loans totaling $45,000,000 for a 70-unit single family residential project. The work involved the negotiation and documentation of a restructure of the loan to provide for a remargining and the collateralization of the lender’s letter of credit exposure.
• Loan modification and restructure of 20 cross-collateralized loans related to a major restaurant franchise.
• Workout and forbearance agreement with a major residential developer. The workout involved negotiations with the developer, senior lender and a defaulted community facilities district. A successful was reached which gave the developer sufficient time to bulk sale the project.
• Forbearance agreement and loan modification agreement for $27,500,000 loan for an office building in Oakland, California.
• Loan modification for a $82,000,000 loan for a downtown office building.
• Negotiation of a $40,000,000 loan forbearance agreement involving a commercial property.
• $50,000,000 loan restructure for an office building.
• $15,000,000 loan forbearance agreement on a condominium property.
• Default and enforcement on $113,000,000 loan secured by Hawaii real estate.

Loan Restructuring.

• $6,750,000 originated by Citigroup.
• $15,700,000 originated by GE.
• $10,300,000 originated by GE.
• $16,500,000 originated by Bank of America.
• $17,250,000 originated by Citigroup.
• $10,372,000 originated by Citigroup.
• $7,455,000 originated by Citigroup.
• $20,000,000 loan originated by Morgan Stanley Mortgage Capital, Inc.
• $10,225,000 loan originated by Key Bank National Association.
• $19,000,000 loan originated by Bank of America, National Association.
• $13,992,000 loan originated by ARCHON Financial, LP.
• $8,750,000 loan originated by Teachers Insurance and Annuity Association of America.
• Enforcement of Remedies/Foreclosures/Deeds in Lieu/Receiverships
• Represented mezzanine lender on 90-unit condo conversion project with a security interest in the membership interest of the developer. Successfully obtained an agreement to appoint a receiver with authority to draw on the construction loan and complete the project.
• Represented large savings and loans in Commercial real estate debt restructuring, receiverships, and foreclosures in Southern California, covering over 250 loans.
• Represented lender in deed lieu foreclosure transaction for large office/industrial park, in satisfaction of $180,000,000 original loan amount.
• Represented lender in judicial foreclosure against water bottling plant in enforcement of secured notes totaling $5.5 million.
• Represented lender in non-judicial foreclosure against residential real property that secured a guaranty.

Note Sales.

• Represented purchasers of loan portfolios from the Resolution Trust Corporation.
• Represented potential purchaser of IndyMac Bank loan portfolios.
• Represented purchaser of a note who foreclosed on a lien on a master planned community, including the negotiation and restructuring of a defaulted community facilities district and defaulted subdivision improvement bonds.
• Represented lender in sale of cross-collateralized loans of fast-food chain secured by real estate.

Real Estate Bankruptcies.

• Represented entity acquiring a majority interest in the developer of a master planned residential community within a bankruptcy proceeding, including restructuring of existing debt.
• Represented purchaser in acquisition of a master-planned community from Chapter 11 case, including confirmed creditor’s plan of reorganization.
• Chapter 11 case of borrower on $74,000,000 loan secured by an office building, resulting in negotiated Chapter 11 plan.
• Chapter 11 case of borrower on $48,000,000 loan secured by hotel property, obtaining relief from stay and foreclosing.
• Represented creditors committee in bankruptcy case, involving a 7,000 acre project planned for development with residences, golf course and amenities.

Sale of Foreclosed Condominium Projects by Lenders.

• Represented foreclosing lender in sale of commercial and residential condominiums in mixed use project, including review and redrafting of owners association and sales documents and advising lender on construction defect and other risk management issues.
• Represented foreclosing lender on residential subdivision issues in “broken” condominium conversion project related to bulk sale of remaining units.