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.