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ARTICLE · 29 OCTOBER 2008

Simple Rules For Surviving The Debt Crisis

Foley & Lardner LLP
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The financial services industry, specifically the real estate capital markets, faces unprecedented challenges that are reshaping the industry in fundamental ways.

United StatesFinance and Banking
Foley & Lardner
Foley & Lardner
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The financial services industry, specifically the real estate capital markets, faces unprecedented challenges that are reshaping the industry in fundamental ways.

As these dramatic changes are implemented, the commercial real estate debt market is struggling to meet demand. Would-be borrowers encounter many obstacles, including:

  1. The collapse of the distribution channel for securitized debt
  2. Significant restrictions on doing any new transactions by traditional bank portfolio lenders because of capital concerns
  3. The tightening of underwriting standards on any new loan requests
  4. The insistence on short-term, floating-rate debt, generally with some recourse

These changes have pushed some tenant-in-common (TIC) sponsors to the sidelines, and transactions that would have happened 12 months ago are not being completed today. However, some TIC sponsors are finding ways to cope and are staying in business. How are they surviving? Here are a few simple rules

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