Doing Business with the Government Panel, 2009 Trigild Lender Conference
In October 2009, Top industry experts gathered at The Trigild Lender Conference to present a
compelling program titled “Doing Business with the Government.”
The high powered panel included Brian Olasov, McKenna, Long & Aldridge; Bruce Nelson,
Situs; Pat Sargent, Andrews Kurth; Bill Eckland, Sidley Austin; Dave Dorros, CBRE; Eric
Paulsen, LNR and Leslie Lundin, LBG Realty Advisors.
According to panel moderator Olasov, last year was a “tumultuous year, in which Wall Street
has acceded its authority to Washington.” In fact, he said, doing business with the government
is a “sign of the times. Washington is calling the shots, but the opportunities are there.”
Among the session highlights:
Q. Can you demystify the government recovery programs that affect Commercial Real Estate?
There are now more than 30 government financial programs in effect. According to Sargent, all
are designed to bring liquidity into the marketplace. “Because of these programs, the locked up
credit markets have improved significantly,” he said. The bottom line? Any economic recovery
will be dependent on a resurgence of securitization in some form.
A few of the programs include:
Troubled Asset Relief Program (TARP): An extensive bailout program originally designed to
buy up the bad debt that threatened the financial stability of banks and has evolved into billions
in government investments in financial institutions.
Public-Private Investment Partnership (PPIP): TARP funds, combined with private investments,
used for the purpose of buying up bad debt. The goals: to clean up bank’s balance sheets so
they can more easily loan money. PPIP had two components: legacy securities, legacy loan
program.
Term Asset-Backed Securities Loan Facility (TALF): Created to loan up to $200 billion to
financial institutions that offered bundled loans for small businesses and consumers. The goal
is to make it easier for consumers to get student, car and other types of loans.
Targeted Investment Program (TIP): This program, run by the Treasury Department, allows the
government to provide aid to a troubled financial institution if that company's problem could
have a ripple on other aspects of the U.S. economy, such as creditors.
Q. What are some FDIC sale and financing methods?
According to Eckland, the government website, www.fdic.gov offers a wealth of information on
this subject. “A powerful tool, it walks you through all aspects of what the FDIC is doing and
also gives you a good feel for what assets are trading for, as well as explaining how to
contract with FDIC. It's a long arduous process, but there are opportunities to contract and
subcontract with the FDIC.”
Investors should also note that the FDIC has an aggressive program targeting women and
minorities, said Lundin. “There's an entirely different system you go through.”
Dorros noted that there are a multitude of ways in which the FDIC makes sales, including
cash, structured (larger transactions run out of Washington), whole bank and REO sales, as
well as the legacy loan program.
The FDIC provides financing, encompassing five categories: acquisition, development and
construction (ADC) loans, commercial loans, commercial and industrial loans (secured or nonsecured),
consumer and residential loans.
ADC loans are especially problematic, as they depend on a healthy real estate market and
completed project. “It's difficult to take over someone's half built project,” Paulsen said.
The good news: the FDIC provides rules and groundwork, giving investors have the ability to
price risk. The biggest problem though, is the lack of options -- the FDIC is essentially being
asked to sell assets nobody wants. “I have yet to see anything of quality on the market,”
Paulsen said. “The really good stuff has been picked off already.”
The FDIC only works with serious, qualified bidders. If you are going to buy FDIC assets, you
need to be prepared to close. It's an even playing field to get the most qualified bidders in.
Q. What is the current environment and what do you foresee for the future?
Between Jan. 1, 2008 and Sept. 30, 2009, 120 FDIC insured banks were closed, with assets
exceeding $470 billion. Additionally, over 400 banks were on the “problem list” as of June 30,
2009.
Obviously, the banking industry is in a state of turmoil. “Banks are under pressure and playing
for time - guarding their capital carefully -- and borrowers don't want to admit they are upside
down,” Olasov explained. “It's a collusive arrangement. No one wants to recognize the
problem, so there is very little movement.”
We are still looking for a structure that works,he added. “It all comes down to a lack of
liquidity.”
There is, said Lundin, pressure on the FDIC to get closer to the smaller end users, but the
FDIC has simply not had time to do so.
“Major workout decisions will have to pass muster with an FDIC contractor,” said Olasov. As
with the residential sector, the government will impose uniform workout requirements on
commercial portfolios.
“We have a ton of loans coming due, so there simply has to be a market for refinancing,” said
Sargent. “There will be lot lot of pressure on bank capital down the road.”
The banks have gotten themselves a good deal, added Eckland. “We are still waiting to see
how it will play out.”
Trigild News
Concentrating on expanding its hospitality division, Trigild has named Randy Hulce as
Managing Director for hotels. Randy comes to Trigild with many years of experience as a
senior level executive in the hospitality industry. He has directed the success of Hyatts,
Marriotts, Hiltons, Westins, Fairmont Hotels and many more franchised and independent hotels
and resorts.
Trigild has announced a date and location for its 2010 Lender Conference: October 20-22 at
the Hilton San Diego Bayfront. For sponsorship inquires, please contact Nicole D’Alesandro at
858-720-6753 or nicoled@trigild.com.
Trigild was appointed receiver for 21 lots and 17 homes -- with canal views and deep water
access -- in a 42-lot housing community in Appollo Beach – a suburb of Tampa, FL.
Also in Florida, Trigild was appointed receiver for a mobile home park in Fort Pierce, FL and
will help resolve issues relating to water and sewage, permits and code compliance.
Adding to its portfolio of mixed use developments, Trigild was appointed receiver for a two
story, 25,000-square-foot mixed-use building in San Juan Capistrano, Calif. with retail stores
on the first floor and offices on the second level.
Trigild president Bill Hoffman will appear at Hotel Brokers International on Jan. 27, 2010 in Las
Vegas, discussing “Hotel Defaults, Receivership, Bankruptcy and Disposition.”
Later that week, on January 29, Bill Hoffman will participate with a panel of real estate and
finance experts, discussing their predictions for the commercial real estate market at the
University of San Diego's 14th Annual Real Estate Conference in San Diego, CA.
About Trigild
Trigild is the only non-performing commercial loan specialist that combines receivership /
trustee, management and disposition services under one roof. That means no coordinating
multiple companies, and no duplication of fees. We have the expertise to quickly take control of
the assets, maximize operating results, and speed recovery by selling the assets quickly
through our national network of industry contacts. This is our core business, not a sideline.
The results? Absolute certainty that you will achieve maximum loan recovery-faster, easier and
more cost-effectively.