Commercial Real Estate Finance

I’ve written extensively about the CRE CLO technology for a long time and why it is the best leverage technology across securitization markets.  With the sponsor typically holding up to 20% of the bottom of the capital stack, it represents the best alignment of interests between sponsor and investor.  For the sponsor, it provides unique

The doctrine of substantive consolidation (generally- the power of a bankruptcy court to consolidate the assets and liabilities of affiliated entities in bankruptcy) is a recognized remedy exercised by bankruptcy courts – one that strikes fear into the hearts of many lenders. Justifiably so. The doctrine can be employed to order the substantive consolidation of related-debtor entities in bankruptcy and it can also be employed to substantively consolidate the assets of a debtor in bankruptcy with those of a related entity that is not a debtor in bankruptcy. Picture this: A parent entity files for bankruptcy and all the goodies are in a series of subsidiaries and the companies have never respected corporate niceties. The bankruptcy court presiding over the bankruptcy of the debtor-parent entity orders that the non-bankrupt SPE borrower will be dragged into bankruptcy and its assets used to satisfy the creditors of both the SPE borrower and the parent. Ta da.
Continue Reading Substantive Consolidation: It’s Alive and Well (or Maybe Just Alive)

More than two years after the first single-family rental securitization, the single-family rental market continues to evolve and grow. The rise of single-family rentals reflects both a demographic shift among the American population and a reactionary change in consumer habits resulting from the financial crises. According to U.S. Census Bureau, the percentage of Americans that own homes has decreased from almost 70% in 2004, to 63.6% in the first quarter of 2016, the lowest percentage in over 25 years. Over 13% of Americans rent single-family homes – a 4% increase from before the crises, accounting for approximately 36% of all rental homes. The decline in homeownership and the increase in the percentage of Americans that rent single-family homes reflects several key demographic and economic changes:
Continue Reading A Contrarian View on the Single-Family Rental Market