You have a class B office building in a Class A location that just lost its anchor tenant. Interest rates are on the rise and remote work is on the march. You are contemplating just giving the keys back to the lender.
But the tax implications would not be pretty and besides, you feel the building has potential and that the office class in general will right itself in the long run.
Another option might be to dust off a structure seen only occasionally in the last ten years ever since the commercial real estate markets became frothy and property values kept on rising. Namely, considering restructuring the debt into a performing A note and a subordinate B note.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
