Discounted Payoffs – Resolving Problem Debt in Commercial Real Estate

Aegis Capital Corp pic

Aegis Capital Corp
Image: aegiscapcorp.com

With an East Coast regional investment presence spanning three decades, Aegis Capital Corp. provides corporate, institutional, and retail clients with a full range of financial solutions. Aegis Capital Corp. offers comprehensive debt market services that range from project financing and refinancing to discounted payoff (DPO).

Commonly employed in resolving commercial real estate problem-debt situations, the DPO is utilized when the real property asset has significantly declined to the point where the amount available for refinancing is less than the outstanding loan. DPOs also come into play when the lender experiences outside pressure to decrease its exposure to the commercial real estate market. As it involves a loss to the lender, it is typically used as a last resort after other debt recovery avenues have failed.

When DPO situations do occur, they must be moved on quickly, which can be problematic, as conventional lenders will be reluctant to step in and help finance this type of payoff. In most situations, a semi-hard or hard money bridge loan is the only viable option for accomplishing the payoff and working toward a footing in which conventional refinancing becomes possible. It makes sense to work with a specialized financial services provider in enabling DPOs to move forward smoothly.

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