Jun 23, 2020
Real Estate Workout + Enforcement Team’ helps lenders, developers, contractors, and landlords grapple with impact of COVID-19
NEWS RELEASE | TORONTO, ON – June 23, 2020
Robins Appleby LLP ‘Real Estate Workout + Enforcement Team’ helps lenders, developers, contractors, and landlords grapple with impact of COVID-19
Bay Street law firm Robins Appleby LLP has assembled a seasonal, multidisciplinary commercial “Real Estate Workout + Enforcement Team” to help solve the shared problems of lenders, developers, contractors, landlords, and tenants suffering from the effects of COVID-19.
“Credit is either drying up or becoming extremely expensive,” said Leor Margulies, head of Robins Appleby’s Real Estate Group. A 30-year veteran of commercial real estate in Toronto, Mr. Margulies specializes in construction financing and residential/commercial development.
“Further, income producing properties, particularly retail and commercial ones, face loss of tenants and potential bankruptcies. If what is going on south of the border, particularly in New York City, is a portend to things to come, things are going to get a lot worse before they get better."
Irving Marks specializes in receivership and litigation: "There is a spectre of an explosion of receivership and CCAA proceedings occurring to deal with landlords unable to meet mortgage payments, retail chains unable to make payments or developers unable to complete projects due to cost overruns and delays, such as the Cresford situation. Lenders, borrowers and condominium purchasers will need some creative help in these challenging situations."
Here are 5 examples of the types of commercial real estate ‘workouts’ that Robins Appleby has done over the years.
There will be no easy solutions. On one side, there are lenders with commercial and residential projects experiencing both cost overruns and falling real estate values at the same time. On the other side, there are borrowers facing uncertain refinancing requirements or loan agreement breaches.
The ‘Real Estate Workout + Enforcement Team’ members can help in many ways:
• Assist financial institutions to restructure problem assets, loans and related security;
• Represent borrowers in negotiations with lenders for financing, refinancing and debt restructuring;
• Provide owners/purchasers with guidance in acquiring/disposing real property in problem transactions;
• Bring borrowers, lenders and potential equity partners together;
• Structure innovative ownership vehicles, equity financing and other conventional financing;
• Represent receivers, lenders, borrowers, purchaser groups and other stakeholders in enforcement and receivership proceedings;
• Resolve disputes among property co-owners through negotiation or litigation; and
• Provide tax planning advice to better manage declining asset values and debt restructuring.
Read our recent bulletin on FAQ - Tax Planning Opportunities in a Down Market.
“Government emergency measures implemented to defeat the virus are the first right answer. But the commercial real estate sector needs more specific kinds of help. Restructuring deals and projects is the second right answer. We are consciously looking for innovative solutions to problems for commercial real estate clients,” said Michael Gasch, partner at Robins Appleby, and a tax planning and restructuring lawyer.
A veteran of previous financial meltdowns, Mr. Margulies commented: "During the 2008-2009 financial crisis, financial and real estate markets came to a standstill for almost a year. During the 1990-1995 recession, real estate values fell anywhere from 25% for existing commercial properties or developments, to 50% or more for undeveloped land. What lies beyond COVID-19 is anyone's guess."
About Robins Appleby LLP
For nearly 70 years, Bay Street law firm Robins Appleby LLP has provided practical legal and business advice to entrepreneurs, businesses, financial institutions, and foreign companies conducting business in Canada. The firm specializes in business law, commercial lending and real estate development, estate & succession planning, litigation, and business tax. The firm has 30 lawyers plus support staff.
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