George Mitsanas

During a boom, it can be easy to skip critical steps and rely on the momentum of the market, but ultimately, you'll get caught when the music stops. During good times and bad, George Mitsanas of Newmark Realty Capital says the completing a complete financial structured work out is essential to risk management, even in a growth period.

“Exceptions define rules, and that is certainly true for boom cycle debt and risk management. As an example, I can point to the odyssey of the Arrive tower. This recently completed 43-story mixed-use tower in Seattle's Belltown survived a tumultuous restructuring to become a triumph of tenacity in Seattle under new sponsorship,” Mitsanas, a principal at Newmark Realty Capital, tells GlobeSt.com. “This well-timed and well conceived project required salvaging nearly $331 million in equity and debt for a project in one the nation's healthiest markets. Distress happens, and when it does, having the experience to address, navigate and resolve issues to satisfy obligations is essential.”

For developers and redevelopment projects, this risk management tool can be essential as the economic conditions can shift during the project period. “Developers naturally face a long list of challenges that can derail a project and put capital at risk,” says Mitsanas. “Entitlement or construction delays from local politics or activists. Boom cycle labor, construction, and commodity scarcity and/or price spikes; or, in the case of a project like Arrive, a breakdown in sponsorship ethics and management. These factors can stress budgets, alter timelines and compel a complete reassessment of feasibility in a healthy market.”