Distressed Note Acquisitions

Aurelian Partners

Distressed Note Acquisitions

Acquiring a distressed note is an inherently complicated transaction. The pressure is mostly on the buyer as there is the necessity to gather as much information regarding the distressed debt as possible, including its terms and conditions, the kind of property used as security, legal procedures, etc. Then there is the question of having adequate funds to carry out the acquisition.

As loans advisors, navigating the process and the relevant laws are well within our extensive experience in commercial and real estate financing. We also have the funding capability to take on the high amount of risk involved as well. You don’t have to look further for a lending institution that can effectively handle such transactions and set up the appropriate financing programs for it.

Purposes For Purchasing A Distressed Note

As you may know, there are various types of loans that can comprise senior and subordinated debts. The more common types of distressed notes targeted for acquisition are those that are secured by commercial real estate, such as offices, stores, or industrial facilities. This type of purchase is also known as a third-party acquisition and allows for:

  • Quick foreclose then liquidation of the underlying asset or
  • Quick foreclose, gaining ownership of the commercial property and then operating it.

Possible Financing Options

There are single loan purchases and then there are buyers who aim to acquire multiple notes. The few lending companies that have delved into this area employ various financing options to accommodate the different ways such transactions can run.

One approach is to make the financing a non-recourse debt. This may feature reasonable loan-to-value ratio, all-in interest rate, or 1 to 5-year terms. Another technique that can be used by lending companies is to purchase the note itself and name their client as the entity assigned to accomplish the foreclosure and gain ownership afterwards.

The distressed note acquisitions space is a growing area of opportunity. If you have plans in this direction, we have the capability to fund any size transaction and the expertise to help you realize your goals in this expanding arena.