Commercial Real Estate Master & Special Servicing

We represent all players in the commercial mortgage markets. Our multidisciplinary team assists servicers and special servicers in all aspects of loan servicing, including full-service tax, securities, bank regulatory, bankruptcy, workout, real estate, and litigation advice.

Our servicing team counsels clients in the creation and management of commercial mortgage servicing and lending programs. We represent all parties in the commercial mortgage markets, including primary servicers, master servicers, special servicers, originators, warehouse lenders, life insurance companies, depositors, trustees, custodians, paying agents, mezzanine lenders, “B-note” buyers, borrowers, successor borrowers, rating agencies, and CMBS investors. We are actively involved in the CRE-CDO market and represent CDO issuers, collateral agents, trustees, and servicers.

New Servicing Agreements

Due to our hands-on servicer representation, we understand the complexities and practical applications of servicing agreements from the day-to-day servicing perspective. This allows us to focus on key issues when we negotiate new servicing agreements for our clients, including:

Delineation of responsibilities
Fee structures
Documentation deliveries
CREFC reporting packages
Servicer termination events
Advancing requirements
Terrorism insurance
Sarbanes–Oxley
Dodd–Frank
Reg AB and Reg AB 2.0
Rule 17g-5
Rule 15Ga-1

Loan Assumptions and Transfers of Interest

Our team helps clients develop assumption/transfer programs and form documentation, and with our clients we close hundreds of transactions annually. Our loan assumption practice ranges from small, single-property assumptions to large, multisite, multistate portfolio transactions and also includes numerous transactions involving 1031 tax-free exchanges, tenant in common structures, and preferred equity structures. Our transfer-of-interest practice ranges from simple transfers of minority ownership interests to complex, multistep, multitier transfers, mergers, and entity conversions involving private and publicly traded companies. We regularly assist clients in interpreting pooling and servicing, co-lender, participation and intercreditor agreements, and loan document provisions, as well as in structuring transactions to ensure compliance with these agreements and the provisions of the tax code governing REMIC trusts and debt obligations generally. We help clients obtain rating agency confirmations and special servicer and bondholder consents. We have working relationships with all major rating agencies and their outside counsel, bondholders, and all servicers to facilitate this process.

Loan Assignments and Satisfactions

Alston & Bird attorneys regularly represent servicers in California, New York, Florida, and other mortgage tax state loan assignments (for CMBS, Fannie, and FHA loans) and with complex loan payoffs and satisfactions involving complex capital stacks.

Consents and General Servicing

One complexity involved in servicing commercial mortgage loan portfolios is processing, reviewing, and approving (or denying) the multitude of borrower consent requests. While protecting the interest of the lenders or the trusts at all times, we take a proactive, pragmatic approach when reviewing consent requests for our servicer clients. We routinely advise servicer clients on the following:

Alterations and improvements
Amendments, extensions, modifications, or waivers to loan documents
Cash management and clearing bank agreements
Co-lender, intercreditor, and participation agreements
Condemnations
Condominium construction, conversions, and releases
Easements
Franchise agreements
Lease reviews, amendments, assignments, and terminations
Land exchanges
Mezzanine and equity financings
Partial releases
Property management agreements
Rate cap confirmation and collateral assignments
Restrictive covenants
Subordination, nondisturbance, and attornment agreements
Subordinate financings
Substitutions of indemnitors defeasances

Defeasance

Alston & Bird represents servicers, consultants, securities intermediaries, and successor borrowers in coordinating the defeasance of CMBS loans and other securitized assets. We represent successor borrowers, servicers, consultants, and securities intermediaries in program-wide restructurings, float-sharing agreements, the purchase and sale of successor borrowers, the purchase and sale of the residual value owned by successor borrowers, prepayment of defeased loans, and other “post-defeasance” issues and transactions. Our attorneys address a broad range of defeasance issues:

Compliance with intercreditor agreements, participation agreements, and/or mezzanine servicing agreements
Compliance with mortgage loan documents
Compliance with pooling and servicing agreements, CDO servicing agreements, or subservicing agreements
REMIC advice
Obtaining rating agency confirmations
Perfecting security interests in securities intermediary accounts
Qualifying successor borrowers
Substantive nonconsolidation
DVP prepayments
Qualified securities

Successor Borrower

Alston & Bird represents successor borrowers and their sponsors in establishing their programs, closing transactions, and various post-defeasance transactions. Our knowledge of rating agency guidelines, servicing standards, tax and regulatory issues, and special purpose entities allows us to structure various successor borrower programs. In addition, we have been on the forefront of various industry issues, including the use of various qualified securities, Q status, DVP payments, prepayments, and sale of successor borrowers.

REMIC Advice

Our tax attorneys have a thorough knowledge of the federal tax code’s provisions regarding REMICs and the exchange of debt instruments. Relevant experience includes:

Loan assumptions and transfers of borrower interests
Collateral improvements
Restructurings to effect UPREIT status
Mezzanine financings and upper-tier investments
Releases and exchanges of collateral
Optional prepayment issues in loan defeasances
Post-securitization establishment of escrow accounts
Addition, substitution, and release of indemnitors
Workouts, bankruptcy, and foreclosures
Ensuring that REO property constitutes “foreclosure property”
Qualified liquidations
Various loan modifications
Obtaining private letter rulings

Special Servicing

Default Protection

We work with servicers to prevent and correct defaulted loans secured by commercial and multifamily properties. We believe a proactive approach often prevents future losses. We assist clients in collecting outstanding monthly payments and penalty charges, enforcing lockbox and cash management agreements, and collecting outstanding financial statements and reports. Our team monitors bankruptcy dockets and provides a comprehensive list of proposed and confirmed lease terminations to alert clients to potential problems.

Defaulted Loans/Workouts

We regularly represent financial institutions in a variety of defaulted loan workout transactions involving bank-held, CMBS, and CDO loans. Typical transactions include workouts, forbearances, discounted payoffs, reinstatements, note sales, deeds in lieu, foreclosures, REO management, and sales. In each workout transaction, we strive to help our clients avoid unnecessary costs by avoiding litigation, when prudent. However, when litigation is necessary with foreclosure or otherwise, we work to enforce lenders’ rights through the courts in jurisdictions throughout the country.

Litigation

Our transactional lawyers, bankruptcy lawyers, and litigators work together to provide comprehensive solutions for our clients in resolving issues related to defaulted real estate investments.

Our lawyers provide advice and support in numerous debt restructuring situations, including:

Foreclosures (including non-judicial and judicial)
Enforcement of guaranties
Enforcement of notes
Receiverships
Control rights
Rights of first refusal
Contract interpretation litigation (including under intercreditor agreements’ waterfall provisions)
Breaches of contract
Note sales
Deeds-in-lieu
Deficiency collection actions against borrowers and guarantors

Represented 3 financial institutions as Master Servicer in connection with the merger of two REITs, which resulted in one publicly traded REIT with an estimated enterprise value of over $7 billion. The merger impacted 124 loans (including multiple portfolio loans) secured by over 370 properties located throughout the U.S.
Represented financial institution as Master Servicer in connection with the merger of two REITs, which resulted in one REIT with an estimated enterprise value of $21.5 billion. The merger impacted 74 loans (including multiple portfolio loans) secured by over 350 properties located throughout the U.S.
Represented financial institution as Master Servicer in connection with a joint venture between 2 national mall operators affecting 7 loans (totaling more than $680 million) secured by regional malls
Represented the Master Servicer in connection with the assumption (structured as a Reverse 1031 Exchange) of a $170 million loan secured by one of the largest multi-use buildings in downtown Miami
Represented a client in its capacity as successor borrower in the defeasance of loans having an aggregate principal balance of more than $2.0 billion
Represented financial institution in acquisition of multiple successor borrowers of defeased securitized mortgage loans. The acquisition was the largest in the industry and a deal of first impression
Represented a financial institution as special servicer in the restructuring and assumption of the $2.78 billion loan secured by the Atlantis Resort in the Bahamas. Compiled a swat team of litigation, servicing, lending, bankruptcy and intellectual property attorneys from across Alston & Bird and the Bahamas to represent the special servicer in brokering an amendment to the participation agreement among the numerous participants and in transitioning all management responsibilities and real property interests in the Atlantis Resort to the new borrower in accordance with Bahamian laws.
Represented a financial institution as special servicer in the workout of a $1.25 billion multi-tranched loan secured by a portfolio of hotel and resort properties in California and Hawaii. Negotiated an amended and restated intercreditor with new mezzanine lenders providing financing in connection with the restructuring of $1.25 billion in senior debt.

Contacts

Elizabeth Murphy

Partner

Charlotte

Phone: +1 704 444 1080

Email: elizabeth.murphy@alston.com