SAN DIEGO-Locally based Pathfinder Partners LLC, a fund manager that acquires distressed commercial real estate loans and real estate from financial institutions, has launched Pathfinder R3—a new rescue financing program designed to provide capital to under-capitalized real estate owners.
According to Pathfinder’s senior managing director, Mitch Siegler, R3 signifies “restructuring, repositioning and rescue financing.” To that end, he says that, “the program’s goal is to help real estate owners and investors—hit hard by frozen debt markets and plummeting commercial real estate values—repurchase or restructure bank loans and reposition projects in need of capital.”
Siegler believes the financing program is among the first of such offerings in the market, but expects such programs to grow, given the large volume of loans which will be maturing over the next few years. “Despite glimmers of hope in the economy, we are in the early innings of a multi-year CRE crisis,” Siegler says.
According to a prepared statement by Pathfinder, US bank lending is at an all time low, plummeting by nearly $300 billion in 2009 alone, according to a recent report by the FDIC. Fueling the problem, commercial property values are down 41.6% from just two years ago, according to Moody’s/Real Commercial Property Price Indices, the statement says. “Additionally, Northmarq estimates that more than 11% of $536 billion of CMBS loans will be at least 60 days past due by year’s end.”
Siegler points out that the company is getting more and more calls from borrowers who are upside down and “simply can’t refinance their loans or secure funding for tenant improvements and leasing commissions for new leases.” He points to a February 2010 report by the Congressional Oversight Panel on the Troubled Asset Relief Program, which warned that $1.4 trillion of CRE loans will mature between 2010 and 2014 and that 50% are already “underwater”— worth less than the mortgage. Siegler adds that the new program will “enable troubled borrowers to restructure, modify or repurchase CRE loans and will provide bridge financing or equity to reposition under-capitalized projects.”
In addition to providing capital, the Pathfinder team, which has participated in more than $20 billion of CRE transactions and includes seasoned real estate investment analysts, attorneys and financial/restructuring experts, is poised to help restructure troubled projects and assist with complex deal structures and tax strategies, according to a prepared statement. Pathfinder has acquired over $150 million in defaulted commercial real estate loans and REO properties since the firm was founded in 2006.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
