Safeguarding financing structures.
In the current market environment, commercial real-estate purchases are usually backed by a high proportion of debt financing while assets are simultaneously being valued at historically high levels. With rising interest rates and poor management, these portfolios will once again come under pressure and the assets will devalue significantly.
This situation will lead to a significantly worse loan-to-value ratio, resulting in banks and lenders undertaking a thorough search for solutions to these troubled real-estate loans.
As soon as the usual forms of collateral have been exhausted, the banks will tend to insist on the shares being included in the collateral pool. Since a share pledge is not possible in these circumstances due to the uncertainties inherent in debt collection from pledged property, the appointment of a professional trustee is required.
FalkenSteg offers combined trust and real-estate management solutions in critical situations.
How the trust model works.
The trustee acts as an intermediary between creditors and debtors. The resulting trust agreement can be custom-tailored to the situation at hand. This set-up provides a secure basis for the restructuring process and provides the greatest possible focus on achieving the sale. Significantly greater consideration will be given to the group of financing partners, allowing them to participate on flexible terms.
Banks will be given preferential status over the proceeds of the sale, ensuring their continued willingness to extend financing. This requires a confirmation of ability to restructure and suitability of restructuring based on the conclusions of a recovery report (Sanierungsgutachten).
If the interests and concerns of all parties involved are taken into account and the shared benefits are highlighted, a trust can be an effective tool for achieving recovery. When properly paired with consistent implementation of the agreed measures, this solution will transform a seemingly unavoidable downturn into a successful restructuring.