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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Note Buyout from Bank or Move On Posted by Lou on December 27, 2009 at 9:59 AM Hello, it's been awhile. My company just finished a commercial project consisting of a group of small buildings, approximately 4k square feet each. The bank has a commitment to provide permanent financing (currently construction loan with extension). They have reneged on the commitment and have now filed notices of sale, TS. We are currently in litigation with the bank, to be heard next year. The bank has already shopped for buyers (type of buyers may not be suitable due to parking space ratios) with a local RE agent before the sale. There is just over 2mm owed on the note. Our attorneys offered 1mm for a note buyout (borrowed from hard money lender). The banks loss could be written off this year to avoid any further reduction in their ratings. The offer was quickly rejected, in fact they were very puzzled why a bank would take a reduction. After calculating operating expenses, cost of funds etc. this project will not provide positive cash flow at full occupancy at today rental rates (current rental rates are 50% from where they were when this construction loan originated). In addition, there is little or no demand for office space in this town, climate has really changed in the last 2 years. Currently, the project is at 14% occupancy if the space we currently occupy is vacant. This is a very small bank, under $120mm in assets, in a small town outside of CA. We were working with 3 potential tenants prior to the NOS filing a few months ago. As soon as the NOS was filed, they just disappeared. The project is now "distressed". Please any advice on how to proceed with this would be greatly appreciated. Thanks Follow Ups: Recourse loan or not? Rick, the Probate Guy 2:09 PM, 12/27/09 (1) Re: Recourse loan or not? Lou 4:22 PM, 12/27/09 (0) Post a Followup: Name : E-Mail : Subject : Comments: : Hello, it's been awhile. My company just finished a commercial project consisting of a group of small buildings, approximately 4k square feet each. The bank has a commitment to provide permanent financing (currently construction loan with extension). They have reneged on the commitment and have now filed notices of sale, TS. We are currently in litigation with the bank, to be heard next year. : The bank has already shopped for buyers (type of buyers may not be suitable due to parking space ratios) with a local RE agent before the sale. There is just over 2mm owed on the note. Our attorneys offered 1mm for a note buyout (borrowed from hard money lender). The banks loss could be written off this year to avoid any further reduction in their ratings. The offer was quickly rejected, in fact they were very puzzled why a bank would take a reduction. : After calculating operating expenses, cost of funds etc. this project will not provide positive cash flow at full occupancy at today rental rates (current rental rates are 50% from where they were when this construction loan originated). In addition, there is little or no demand for office space in this town, climate has really changed in the last 2 years. Currently, the project is at 14% occupancy if the space we currently occupy is vacant. : This is a very small bank, under $120mm in assets, in a small town outside of CA. : We were working with 3 potential tenants prior to the NOS filing a few months ago. As soon as the NOS was filed, they just disappeared. The project is now "distressed". : Please any advice on how to proceed with this would be greatly appreciated. : Thanks [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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