“Distressed Real Estate – Discount Is No Substitute For Diligence”
Amidst the bloodshed of stalled and defaulting development projects, a number of our clients view the purchase of discounted debt as a shortcut to buying a (possibly) successful development. Acquiring a project post-disaster can mean substantial time-savings and cost-savings because construction, permitting, leasing and pre-sales will be in various stages of completion. Moreover, acquiring a troubled project via debt acquisition may allow the purchaser to wipe out certain liens, putting the purchaser in a better position than the original owner/borrower. However, there are still substantial risks involved when taking over a defaulted project loan.