Adam Petriella

This spot is normally reserved for people and issues beyond the norm. But the credit crisis has given birth to a rather shaky lending environment in which Adam Petriella recently found himself embroiled. His story, originally recorded in the August 27 issue of Debt & Equity Journal , appears here specifically because it is not the exception but the growing norm. The director of Marcus & Millichap Capital Corp. in Los Angeles, was battling with a lender that wanted to change the spread on a loan the borrower rate-locked several weeks ago. The lender, he explains, took advantage of the adverse market condition clause to change the terms on the loan. But Petriella expressed his confidence at the time that he could either change the lender’s mind, or, at least, work out a compromise. “It is doable,” he said, “even as the market goes crazy.” DEJ spoke with Petriella to get his behind-the-scenes view of how to get deals done in this suddenly volatile market.

DEJ: How do you think you can get this particular lender to see things your way?

Petriella: This particular borrower–this is a $30-million loan–locked the rate when T-bills were at 490 and locked the spread at 140. That was three weeks ago. The T-bills are now at 460, but the lender still wants to increase the spread to 200. Our argument is that it can’t have it both ways–T-bills are now lower, but the lender still wants to raise the spread. How will we change the lender’s mind? There are number of ways, starting with the volume of business we bring to it. And there are other issues on the table I can’t talk about.