Distressed Real Estate

Our Distressed Real Estate team is a longstanding national leader in handling and resolving distressed real estate matters. Established more than a decade ago, the team successfully helped a wide range of clients navigate the last market downturn and guided them through COVID-19 related disruptions and, now, through current market challenges arising from increasing interest rates and construction costs, and the impact of an inflationary and, potentially, recessionary environment.

The firm’s Distressed Real Estate team draws on talent and experience from both transactional and litigation practices to create a multidisciplinary, results-focused team that works closely with lenders, servicers, investors, developers, owners, landlords, tenants, trustees, and receivers to design and implement the best approaches to resolving troubled real estate investments and loans and related disputes. The team also advises on opportunistic investing, rescue capital transactions, distressed loan purchases, and bankruptcy matters.

As market challenges increase, members of our distressed real estate practice are assisting clients with loan restructurings and workouts, loan sales, receivership sales, foreclosures, UCC sales and other enforcement matters, bankruptcies and reorganizations, liquidations, asset distribution, and intercreditor matters. The group also handles landlord and tenant disputes, lease restructurings and enforcement matters, and construction disputes and claims. With years of finance and development experience involving a wide-range of complex projects and capital stacks, our team knows how to identify key issues and considerations and to implement effective strategies to achieve our clients’ goals. We have advised clients on a variety of distressed projects, including shopping centers and malls, office complexes, hotels, resorts, casinos, industrial properties, senior housing and retirement communities, nursing homes, master-planned and mixed-use developments, and condominiums.

With offices in some of the most active markets in the country, we understand each area's regional issues, local laws, political climate, and distinct market characteristics. That perspective, coupled with our extensive experience in real estate and development, finance, litigation, taxation, and bankruptcy, gives us the skills and insight needed to help clients find creative and effective workout and enforcement solutions and to protect, preserve and monetize their investments.

Our Experience and Services

Restructurings, reorganizations, and liquidations, both in and out of bankruptcy
Balance sheet and securitized loan restructurings, workouts, and enforcement actions
Master and special servicer representations, including pooling and servicing agreements and REMIC-related issues
Troubled asset and loan dispositions and acquisitions
Trust litigation matters
Mezzanine loan transactions
Preferred equity investments
Receivership appointments for diverse commercial projects
Restructuring and redevelopment of distressed projects
REO and property management matters
Guarantor enforcement actions
Joint venture and owner disputes
Intercreditor disputes

The Distressed Real Estate Team is a multidisciplinary practice with attorneys from Ballard Spahr’s Finance, Litigation, and Real Estate Departments, who cover all aspects of troubled real estate investments, loans, and projects.

Experience

Represented many of the largest lenders, special servicers, and bond trustees in the workout, enforcement, and resolution of a wide-range of loans and projects having an aggregate value well in excess of $10 billion, including various office and mixed-use projects, involving a wide-range of restructuring and enforcement strategies
Representation of a lender in the workout of two cross-collateralized loans having an aggregate principal balance of $143.5 million. The transaction involved the lender obtaining title to the properties, entering into new leases and extending existing leases and ultimately selling the properties to third-party purchasers
Representation of a large national real estate developer in the workout and restructuring of $450 million in CMBS financing secured by a multi-phase special-use property consisting of over 5 million square feet

Represented one of the largest institutional investment funds as bond holder in multiple lawsuits arising out of several credit-tenant leases involving a 19-story office building in the heart of downtown San Diego. The bond exposure was in excess of $130 million. The Ballard team prevailed on summary judgment in one of two related lawsuits, and resolved the second lawsuit, resulting in 100 percent of the principal loan balance ($130 million) being returned to the lender group, including default interest, and a 100 percent recoupment of fees and costs
Represented a private equity company in litigation against Vail Resorts, Inc. and a defaulting borrower in Colorado State District Court stemming from the breach of an $18 million real estate acquisition and development loan
Representation of a national special servicer in the workout and restructuring of a $130 million first mortgage loan on a 1,000-plus-unit residential rental project. This transaction involved an A/B note split of the loan, modification to the cash management arrangement, modifications to address the bankruptcy of the sponsor's holding company, and REMIC-related matters
Representation of a federal court-appointed receiver in all facets of a multi-property, multi-state receivership in connection with the operation, preservation, and disposition of 22 residential development projects, including 11 projects in Pennsylvania, involving approximately 848 residential units/lots
Representation of one of the nation’s largest commercial loan special servicers in a foreclosure and receiver action involving assisted-living facilities and the ultimate disposition of the facilities by the receiver
Representation of a Utah industrial bank in a deed-in-lieu transaction for a student housing project in the University City section of Philadelphia; including negotiating a license for the continued use of the project name and website and structuring the title-taking entity so as to minimize Philadelphia and Pennsylvania transfer taxes
Representation of a national commercial bank in the workout of a multi-loan relationship with a regional, single-family homebuilder, including the representation of the bank in the bankruptcy of one of the borrowing entities and a structured sale of residential building lots to another homebuilder
Representation of one of the nation’s largest special servicers in the workout and foreclosure of a retail project in eastern Pennsylvania, including the structured termination of a major lease in the tenant's liquidation outside of bankruptcy, the appointment of a receiver, the successful completion of a mortgage foreclosure action, and the releasing of a bankruptcy anchor tenant store
Representation of a special servicer with a workout of a first lien securitized commercial mortgage loan in the approximate amount of $181 million secured by a 1.4 million square foot regional shopping center located in Northern Virginia
Representation of a national finance company in the origination of a $19 million loan secured by a defaulted $32.3 million construction loan note secured by a mortgage on a multifamily project located in Las Vegas, Nevada, where the underlying borrower was in bankruptcy, pre-plan approval. This representation included extensive structuring to allow for a number of possible resolutions to the bankruptcy including sale, foreclosure, deed in lieu of foreclosure, or restructuring
Representation of a private equity fund joint venture in the workout and restructuring of a $42 million land loan and an $18 million construction loan secured by a partially completed, planned luxury residential community
Representation of a private mezzanine loan equity fund in the restructuring of various mezzanine loans, including intercreditor matters and structuring equity participations

Distressed Assets and Opportunities

Our multidisciplinary Distressed Assets and Opportunities team leverages its comprehensive experience in all aspects of distressed assets to help clients address the challenges and opportunities of economic uncertainty.

Learn More

Distressed Office Buildings: Considerations and Strategies

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Experience

Distressed Assets and Opportunities

Distressed Office Buildings: Considerations and Strategies

The Best of Times, the Worst of Times: Attorneys Reflect on Economic Crises Past

People

Insights, News, and Events

White Paper: CRE CLOs and Distress

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CRE Reset Heats Up as Lenders Take Fight to Guarantors

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Resources

Distressed Real Estate Brochure

Distressed Office Buildings Brochure

Distressed Hotels, Resorts, and Hospitality Assets Brochure

Foreclosure and Receivership Process Booklet

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