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01/31/2023
Pivot Points Newsletter: February 2023
Case Studies
Student Housing
Background: During COVID-19, when students were sent home and learning was moved online, a student housing community experienced crime, occupancy decline, and liquidity constraints. As a result, the organization needed a capital injection for repairs and operations. The maturing bridge loan contained extension options and the covenant conditions could not be met by the property.
Our Role: Advisor
Results:
- Negotiated covenant waivers
- Reduced fees for the extension of the maturity date, incentivizing the sponsor’s new equity injection for repairs
- Changed property management and stabilized the property through the 2021-2022 school year
- Generated covenant and fee concessions that allowed the sponsor to forgo a $7M+ capital call
- Stabilized property was positioned for sale and the loan was retired in 2022
Specialty Office
Background: An owner-occupied office building had been financed with bank debt and very low leverage prior to securing a third-party lease for the entire building. With the lease, the owner wanted to maximize the value of the building and refinance the bank loan.
Our Role: Advisor
Results:
Identified a new financing source to retire the full-recourse bank loan with a higher loan to value and non-recourse debt, allowing the owners to monetize part of their equity. After a year of lease seasoning, the building was sold, and the owners were able to fully realize their investment and ~$1M ROI.
Recent Engagements
Chain of Fitness Clubs
Our role: Retained by the chapter 7 trustee to perform insolvency and valuation analysis for litigation support of various recovery actions.
Beach, Golf, and Yacht Resort Community
Our role: Conducted a forensic investigation of financial reporting and management services that were provided by a third party.
Vitamin Company
Our role: Served as financial advisor in chapter 11 bankruptcy. We prepared a new business plan with detailed financial projections and managed negotiations and settlement of claims against the Debtor’s estate.
Events
ACG New York DealMakers Dinner Series (Feb. 9) – Speaking/Attending
12th Annual Distressed Forum for Bank Special Assets (East) (Feb. 14-15) – Attending
Structured Finance Association SFVegas 2023 (Feb. 26 – Mar. 1) – Attending
McGuireWoods’ 19th Annual Healthcare Private Equity and Finance Conference (Mar. 1-2) – Speaking/Attending
National Real Estate Women’s Forum (Mar. 2) – Speaking/Attending
2023 ACG Texas Capital Connection (Mar. 7-8) – Attending
IWIRC's 20th Annual Spring Conference (Apr. 19-20) - Attending
ABI Annual Spring Meeting (Apr. 20-22) – Attending
ABI VALCON 2023 (May 1-3) – Attending
Subject matter expertise
Kevin Clancy
CPA, JD, CIRA, CFF, CTP, Global Director, Restructuring and Dispute Resolution Practice
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This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.