Eastern Union has launched a Distressed Notes Initiative
that will identify investors interested in purchasing lenders’ troubled
mortgages.
The company, one of the country’s largest commercial real
estate finance firms, will leverage its database of investors to help community
banks and private debt funds find buyers for their distressed debt.
“We understand what lenders need and we will serve their best interests,” said Abe Bergman, the Eastern co-founder who will spearhead the new initiative.
“At the same time, we have strong and well-established
business relationships with vast numbers of investors. Many will be willing to
take troubled loans off of lenders’ hands.”
According to Bergman, a number of lenders had recently
reached out to Eastern Union indicating that they expected to face liquidity
issues in the coming weeks or months, especially as regulatory circumstances
evolve.
These lenders said they expected to need brokerage
assistance in selling off troubled loans, and asked if Eastern Union could
assist. These lender queries were part of the reason Eastern Union inaugurated
its Distressed Notes Initiative.
It won’t be the first time the mortgage brokerage has worked
in the disposition of distressed debt, having pivoted to a similar role during
the 2009 recession.
“We know exactly
how lenders think during these types of downturns,” Bergman said. “We
are in constant contact with banks right now, and we understand their mindset
during these challenging times. This creates a close level of communication
that puts Eastern Union ahead of the curve and allows our team to anticipate
what to expect next.”
Day-to-day management of the new unit will be handled by Eastern Union vice presidents Mark Rosenzweig and Boruch Mandel, both senior real estate finance executives at the firm. They have extensive experience in placing both equity and debt, and have collectively closed transactions valued at a total of more than $300 million.
According to Bloomberg, the amount of distressed debt in the
U.S. has quadrupled to nearly $1 trillion, reaching levels not seen since 2008
as the collapse of oil prices and fallout from the coronavirus shutters entire
industries worldwide.
The total is expected to be even higher, because the
calculation excludes debt of small- to medium-sized companies whose loans trade
rarely, if at all.
