Workout Considerations for Distressed Tenant in Common Properties

• Overview

Between the years of 2003 to 2008, billions of dollars of tenant in common transactions closed, many of them with high leverage and significant costs of closing above the value of the property. Many of these transactions are now distressed. Sponsors and broker dealers are distracted and struggling to survive, lenders are reluctant to negotiate with multiple owners and investors are faced with declining distributions, capital calls and even loan defaults and foreclosure, triggering very adverse tax consequences. Layered over these problems is the complex tenant in common structure mandated by the IRS, making concerted actions difficult. Many of these transactions are reaching crisis stage, with litigation or arbitrations increasing in frequency. All participants in the tenant in common industry or those seeking to provide services or capital to help resolve distressed TIC deals will find this program filled with helpful guidance based on current market conditions.

Authors

Agenda

What Makes a TIC Deal 'Distressed'?

• Default Under Loan Documents

• Cessation of Distributions

• Ineffective Property Management

• Capital Calls

• Financial Distress of Sponsor/Master Lessee

Initial Steps

• Identifying Leaders

• Retaining Counsel for the Investors

• Contacting Sponsor/Contacting Investors

• Involving the Broker Dealers

• Deciding on a Course of Action and Building a Consensus

Implementation

• Terminating the Sponsor/Property Manager

• Retaining a New Property Manager

• Lender Approvals

• Dispute Resolution

• Alternatives to Capital Calls

• Settling Claims