Distressed Collateral Monitoring for Real Estate Lenders

In the face of unprecedented challenges brought about by rapidly rising interest rates, inflation, and market illiquidity, reliable collateral performance data is more important than ever in supporting the resolution of distressed commercial and multifamily mortgages.

The Impact of Higher Interest Rates on Credit Risk

Higher interest rates have set off a chain reaction across the industry, resulting in:

• Lower Debt Service Coverage: Particularly affecting floating-rate debt and maturing loans.
• Cap Rate Pressure: Pushing down collateral values.
• Challenged Borrower Business Plans: Value-add strategies and new developments may not have achieved targeted cash flow.
• Tighter Underwriting: Often necessitating additional capital to refinance.
• Covenant Breaches: Debt coverage and debt yields are not achieving benchmarks set in the loan agreement.

Your Trusted Partner in Uncertain Times 

To develop the right plan for distressed loans, whether extension, work out, sale, or foreclosure, the lender needs to have reliable collateral performance data. Not all property financials are audited, and not all property companies have a robust accounting and control infrastructure.

EisnerAmper helps to fill this gap, working with the borrower to provide the lender with complete and accurate financial information and enable sustainable distressed debt resolutions.