Howard Koh Examines Distressed Office Loans and Foreclosure Alternatives in Law360
Real Estate
Meister Seelig & Schuster (MSS) Partner Howard S. Koh authored a recent Law360 article, “Foreclosure May Not Be The Fix For Distressed Office Loans,” examining how the ongoing challenges facing New York City’s commercial office market are reshaping the way lenders and borrowers approach distressed loans.
In the article, Howard explains that foreclosure is increasingly not the preferred or inevitable outcome when an office loan falls into distress. Instead, borrowers, lenders, special servicers and other stakeholders are navigating extended negotiations involving loan modifications, extensions, restructurings, discounted payoffs, receiverships and other workout strategies.
Howard examines the economic and legal considerations driving these negotiations, including declining office values, refinancing challenges, the role of special servicers in CMBS loans, lender concerns about taking ownership of distressed assets, and the potential tax consequences borrowers and investors may face when deciding whether, and when, to walk away from an underperforming property.
As Howard writes, the next phase of New York City’s office real estate cycle is likely to be shaped less by completed mortgage foreclosures and more by negotiated resolutions and restructurings, with litigation serving as one of several tools parties may use as they determine how to allocate losses and the costs associated with repositioning distressed office assets.
Read Howard’s full article in Law360.
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