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CASE STUDY:
DEBT RESTRUCTURING ADVISORY

A retail real estate development company, with a public REIT as majority equity partner, had purchased a vacant parcel of land for development

As the retail market had collapsed, the project was not developed and, although the lender still had confidence in the development team, they now needed to reduce their real estate exposure.


METROPOLITAN CAPITAL INVESTMENT BANC
  • Formed a new subsidiary (NewCo) to purchase the Note
  • Developed transaction structure
  • Negotiated the purchase of the Note, by NewCo, at a significant discount
  • Enabled the ownership partnership to defer the forgiveness of indebtedness and avoid a taxable event at the time of the transaction
METROPOLITAN CAPITAL BANK & TRUST
  • Enabled a loan to NewCo to fund this purchase that was secured by the original note and mortgage
  • Enabled the majority equity REIT to support the credit as guarantor without violating their existing loan covenants with the large primary lender