Nov. 19, 2025
The Investor’s Guide to Distressed Debt in 2025–2026
Distress is building faster than most investors realize — and 2025–2026 will be the biggest transfer of CRE wealth since the Great Financial Crisis.
This episode is Part 2 of Aviva Sonenreich’s extended conversation with Michael Cohen, continuing the deep dive into CMBS distress, why Denver is becoming one of the most troubled MSAs in the country, and how investors can prepare for the wave of maturities ahead.
Highlights:
- The real reasons Class A assets are stabilizing while Class B properties face mounting distress
- The CMBS data points that reveal the severity of Denver’s office, multifamily, and hospitality stress
- Whether high-profile assets — like Aspen’s $85M Prada store — can still secure CMBS financing
- How DSCR drops, trapped reserves, and cash sweeps quietly strip borrowers of leverage
- The decision-making hierarchy inside CMBS servicing — and why “waiting and hoping” never works
Perfect For:
Investors preparing for the 2025–2026 distressed cycle, owners with CMBS loans nearing maturity, family offices protecting generational assets, brokers advising clients through workouts, and anyone who wants a clear, unfiltered understanding of how CMBS distress actually works — and what’s coming next.
1
00:00:00,040 --> 00:00:02,600
This week on commercial real
estate Secrets, we have Mr.
2
00:00:02,600 --> 00:00:05,960
Michael Cohen.
Michael Cohen is the managing
3
00:00:05,960 --> 00:00:08,880
principal at Brighton Capital
Advisors.
4
00:00:08,880 --> 00:00:10,600
Michael, thank you for being on
the show today.
5
00:00:10,600 --> 00:00:11,960
Thanks.
For having me.
6
00:00:15,280 --> 00:00:17,000
I'm thinking two different
things.
7
00:00:17,000 --> 00:00:19,600
I don't know if I want to go
right or go left, OK, but I'm
8
00:00:19,600 --> 00:00:21,560
going to go right.
And it's random because we
9
00:00:21,560 --> 00:00:23,320
started talking about Woody
Creek, Colorado.
10
00:00:23,840 --> 00:00:27,000
I'm staring at the I love Aspen
commercial real estate.
11
00:00:27,000 --> 00:00:32,360
I'm staring at the market 312 S
Galena goes on the market, The
12
00:00:32,360 --> 00:00:36,600
Prada store.
It's on sale for only $85
13
00:00:36,600 --> 00:00:38,600
million for this little
property.
14
00:00:39,240 --> 00:00:43,520
Can a person get a C MB S loan
on a building like that?
15
00:00:44,320 --> 00:00:47,920
You know, they have, so I there
was actually, so I, I haven't
16
00:00:47,920 --> 00:00:52,880
done any financings or seen the
financing in Aspen as much as
17
00:00:52,880 --> 00:00:55,280
I've seen them done in other
markets.
18
00:00:55,280 --> 00:00:58,880
So I'll give you an example.
We worked on a deal on 5th Ave.
19
00:00:58,880 --> 00:01:04,760
in New York City, very large,
very in the in the gold district
20
00:01:04,760 --> 00:01:09,640
between 50s and 5th Ave. for a
extremely wealthy family.
21
00:01:09,720 --> 00:01:15,840
And the the problem is that the
tenant during COVID left and the
22
00:01:15,840 --> 00:01:19,400
borrower came back and said,
mate that was trying to contact
23
00:01:19,400 --> 00:01:23,240
the lender, the servicer and
say, hey, look, the tenant left.
24
00:01:23,240 --> 00:01:28,000
They owe us $100 million, we're
able to get $95 million.
25
00:01:28,000 --> 00:01:30,840
Are you good with that?
Nobody answered.
26
00:01:31,080 --> 00:01:33,840
So eventually they did it and
then the servicer turns around
27
00:01:33,840 --> 00:01:35,440
and said who told you you could
do that?
28
00:01:36,520 --> 00:01:40,840
So we are this is these are
certain things that you have to
29
00:01:40,840 --> 00:01:43,320
be protected on.
So that's so that's a problem,
30
00:01:43,320 --> 00:01:45,760
right?
But these loans can be done.
31
00:01:46,240 --> 00:01:49,720
It's just a matter of where the
market is today and the leverage
32
00:01:49,720 --> 00:01:52,480
I'm in a bigger deals like that
one.
33
00:01:53,720 --> 00:01:56,320
There's there's a lot of people
that you're the right now
34
00:01:56,320 --> 00:01:58,800
because there's so much
liquidity in the market, meaning
35
00:01:58,800 --> 00:02:01,760
investors have so much free cash
that they could use.
36
00:02:02,240 --> 00:02:04,600
You're actually competing
against somebody who can come in
37
00:02:04,600 --> 00:02:08,800
and say, you know, I'd like that
a lot and I'm just going to buy
38
00:02:08,800 --> 00:02:11,840
it tomorrow and I'm going to I'm
going to buy, I'm going to buy
39
00:02:11,840 --> 00:02:14,320
that all cash.
So the really, really good
40
00:02:14,320 --> 00:02:18,200
properties, those are the ones
that are doing really well.
41
00:02:18,200 --> 00:02:23,200
So I was just on a panel for a
law firm in New York 3 weeks ago
42
00:02:23,200 --> 00:02:27,760
and there was an economist going
to banks on the panel with me.
43
00:02:27,760 --> 00:02:30,040
Said Class A is already
stabilized.
44
00:02:30,040 --> 00:02:34,240
So all the really good
buildings, they're really good
45
00:02:34,240 --> 00:02:36,440
locations.
All of those are, you know,
46
00:02:36,440 --> 00:02:38,400
they're stabilized, they can get
loans.
47
00:02:38,400 --> 00:02:40,640
They're, they're pretty good.
And you're usually when you're
48
00:02:40,640 --> 00:02:43,640
finding you're buying for
location anyway, you're, you're
49
00:02:43,640 --> 00:02:45,840
not over levering it.
You're, you're, you're putting a
50
00:02:45,840 --> 00:02:48,680
50% loan or you're putting
something conservative because
51
00:02:48,680 --> 00:02:51,240
this is maybe a a family thing
and you're, you're just kind of
52
00:02:51,240 --> 00:02:55,520
kicking this down.
Now we're into where Class B, so
53
00:02:55,520 --> 00:02:58,680
that's all B assets.
So that may be a Walmart give up
54
00:02:58,760 --> 00:03:02,040
in the center next to it, which
is so it's not an A, but it's
55
00:03:02,040 --> 00:03:05,640
not A, it's not AC.
So those are stabilizing too.
56
00:03:05,640 --> 00:03:10,040
So what happens now is we get
the distress, but the distress
57
00:03:10,040 --> 00:03:13,000
is a mixed bag of goods.
So the distress can either be,
58
00:03:13,560 --> 00:03:18,080
hey, I just happen to lose this
tenant and I, I had this great
59
00:03:18,080 --> 00:03:21,920
center and the grocery store has
two years left on the lease and
60
00:03:21,920 --> 00:03:24,840
I can't, can't get a renewal
loan for it and I need more
61
00:03:24,840 --> 00:03:27,880
time.
Or it could be, Oh my God, this
62
00:03:27,880 --> 00:03:29,840
thing is like downtown Denver,
right?
63
00:03:29,840 --> 00:03:32,280
And we were looking and we're
talking about this before.
64
00:03:32,280 --> 00:03:37,680
So on the office, the Denver has
the highest percentage of
65
00:03:37,680 --> 00:03:42,000
properties in special servicing
with the debt service coverage
66
00:03:42,000 --> 00:03:49,440
below one O of all the top 25
Msas, which is 39% CMBS loans of
67
00:03:49,440 --> 00:03:53,920
$6.2 billion of total product.
So Denver, downtown.
68
00:03:55,160 --> 00:03:58,240
I Chihuahua.
Yeah, yeah.
69
00:03:58,280 --> 00:04:00,200
I mean, I know, but I didn't
know it was.
70
00:04:01,080 --> 00:04:07,680
It's better it's bad because
you're because now you're it's
71
00:04:07,720 --> 00:04:09,800
in every real estate cycles the
same.
72
00:04:09,920 --> 00:04:13,480
So what what does that mean?
It means that there's always a
73
00:04:13,480 --> 00:04:16,800
flight to quality.
So if there if there's a better
74
00:04:16,800 --> 00:04:20,680
office building for cheaper
price, you're going to go to it.
75
00:04:20,920 --> 00:04:23,480
So what does that mean?
Any building that you didn't
76
00:04:23,480 --> 00:04:26,960
don't like so much, you're not
going to go well, OK, well, what
77
00:04:26,960 --> 00:04:28,160
Well, great.
What are we going to do with
78
00:04:28,160 --> 00:04:30,400
that building?
Well, if it was built before
79
00:04:30,400 --> 00:04:33,040
1985, you can't knock it down it
as asbestos it.
80
00:04:34,680 --> 00:04:37,040
So what are you gonna do with
the suburban office building?
81
00:04:37,440 --> 00:04:41,440
So it, it all becomes how low of
a price you can go.
82
00:04:41,440 --> 00:04:44,040
Chicago's having a a we, we're
doing 2.
83
00:04:44,400 --> 00:04:47,720
We're doing a number of deals in
in Chicago and they're having
84
00:04:47,720 --> 00:04:50,720
the they're having a very big
problem because just like the
85
00:04:51,040 --> 00:04:55,000
residential crisis, if you own
your house, but your neighbor
86
00:04:55,000 --> 00:04:59,160
just foreclosed on both sides of
you, your value is their value.
87
00:04:59,160 --> 00:05:00,720
There's nothing great about your
thing.
88
00:05:00,720 --> 00:05:02,720
It's all commodity.
Wow.
89
00:05:02,720 --> 00:05:06,440
Well, I know that Denver stats
definitely be going to be a clip
90
00:05:06,880 --> 00:05:10,480
that my team makes into a short
because.
91
00:05:11,480 --> 00:05:14,760
Yeah, well, the multifamily is
showing signs of stress as well.
92
00:05:15,880 --> 00:05:18,720
Let's see MSA, I'm just reading
from my notes, it's the seventh
93
00:05:18,720 --> 00:05:21,520
highest number of CMBS
multifamily loans on the watch
94
00:05:21,520 --> 00:05:26,320
list, which is 162 properties of
the in poor 2.9 billion.
95
00:05:26,880 --> 00:05:30,320
They have another 238 million in
delinquent multifamily loans,
96
00:05:30,320 --> 00:05:36,760
which is the top, 10th highest
of all top 25 Msas and a total
97
00:05:36,760 --> 00:05:40,240
of $2.3 billion of loan with a
with a debt service coverage of
98
00:05:40,240 --> 00:05:43,000
11 point or below, which is the
12th highest.
99
00:05:43,320 --> 00:05:48,720
So there's a lot of problems.
Nobody the press doesn't like to
100
00:05:48,720 --> 00:05:51,160
talk about problems that some
things they don't, sometimes
101
00:05:51,160 --> 00:05:53,800
they don't, but they like to
talk about green shoots.
102
00:05:53,800 --> 00:05:57,480
If you ever had a long with
green shoots and but the green
103
00:05:57,480 --> 00:06:00,080
shoots are there for longer
than, I don't know, a month or
104
00:06:00,080 --> 00:06:02,200
two months, they're kind of like
those aren't green sheets.
105
00:06:02,200 --> 00:06:05,480
Those are a problem that's going
to last us for a while.
106
00:06:07,160 --> 00:06:10,880
It's a matter of when the banks
and the insurance companies and
107
00:06:10,880 --> 00:06:13,960
the CMBS wants.
Who wants to take the loss when
108
00:06:14,480 --> 00:06:19,240
is really the question.
So hypothetically, if everybody
109
00:06:19,240 --> 00:06:22,080
takes the loss at the same time,
that's when we find ourselves in
110
00:06:22,080 --> 00:06:25,040
another financial crisis.
We we will if if the government
111
00:06:25,040 --> 00:06:29,160
were to say if if I I got
waiting for this and the
112
00:06:29,160 --> 00:06:33,720
government don't always say the
government in in any
113
00:06:33,720 --> 00:06:36,400
environment, political
environment is is doing well,
114
00:06:36,400 --> 00:06:37,720
right.
They deliver my mail.
115
00:06:37,720 --> 00:06:41,960
I'm kind of happy.
So if, but if you have a
116
00:06:41,960 --> 00:06:46,120
scenario where the government
has been doing a good job of
117
00:06:46,720 --> 00:06:50,960
keeping the banks from panicking
and dumping because if one bank
118
00:06:50,960 --> 00:06:53,480
dumps, it's a race to the
bottom.
119
00:06:53,520 --> 00:06:56,320
And that's what they could have
done this during COVID, right,
120
00:06:56,320 --> 00:06:58,400
Because banks were like, God, we
have this.
121
00:06:58,400 --> 00:06:59,760
We don't nobody's already gonna
go back.
122
00:06:59,920 --> 00:07:02,840
There was saying, I remember in
COVID, people are like who's
123
00:07:02,840 --> 00:07:05,000
ever gonna go back to a
university, right.
124
00:07:05,000 --> 00:07:07,920
You know, who's like, you know,
we, we went to all draconian
125
00:07:07,920 --> 00:07:11,200
things.
And so by keeping them alive,
126
00:07:11,200 --> 00:07:13,440
we're not we're we're slowly
letting this.
127
00:07:13,440 --> 00:07:15,200
But what's happening behind the
scenes?
128
00:07:15,520 --> 00:07:18,840
And I travel around the country
and I speak in a lot of places
129
00:07:18,840 --> 00:07:22,800
and I speak to the press, I
speak to market participants, I
130
00:07:22,800 --> 00:07:25,240
speak to law firms.
We've, we've probably done over
131
00:07:25,720 --> 00:07:29,520
30 different presentations on
CMBS to the major law firms in
132
00:07:29,520 --> 00:07:34,240
the around the country offices.
Because again, we know something
133
00:07:34,240 --> 00:07:37,280
that we're just in the front
line and people don't understand
134
00:07:37,680 --> 00:07:40,200
what the depth of the iceberg is
here.
135
00:07:40,200 --> 00:07:45,160
And you, you, you find that
there's a number of these
136
00:07:45,160 --> 00:07:49,360
private equity firms that have
billions of dollars that are
137
00:07:49,360 --> 00:07:51,880
already buying pools of loans
from banks.
138
00:07:53,360 --> 00:07:56,080
And because the banks aren't
putting out the loans all at
139
00:07:56,080 --> 00:07:59,960
once, creating a, a frenzy and
a, and a kind of a, a piranha
140
00:07:59,960 --> 00:08:03,520
tank, that the values are
staying higher because they put
141
00:08:03,520 --> 00:08:06,280
out one thing at a time and
everybody fights over it and
142
00:08:06,280 --> 00:08:09,480
bids up the bids up the credit.
So you've got a lot of hungry
143
00:08:09,480 --> 00:08:12,240
investors out there that are
dying to put money to work.
144
00:08:13,400 --> 00:08:14,680
And I thought it was the same
thing.
145
00:08:15,760 --> 00:08:17,680
Be patient because we're not
there yet.
146
00:08:18,120 --> 00:08:22,040
And and because again, if you go
out and you think you've got a
147
00:08:22,040 --> 00:08:25,000
great deal, if that building
next door goes under, you just
148
00:08:25,000 --> 00:08:29,480
lost your equity value.
Hi, Chihuahua.
149
00:08:30,080 --> 00:08:33,520
Yeah.
So then then just to top it off,
150
00:08:34,159 --> 00:08:36,159
your hotels are not so great
either in Denver.
151
00:08:36,200 --> 00:08:39,799
Sorry.
Hospitality is another worrisome
152
00:08:39,799 --> 00:08:43,640
area for Denver with 43% of its
hospitality loans have been
153
00:08:43,640 --> 00:08:46,960
watch listed.
It's 20 loans or 390 million
154
00:08:47,240 --> 00:08:51,000
that's the fifth highest of all
the top 25 Msas and there are 5
155
00:08:51,000 --> 00:08:54,920
hotel loans currently delinquent
totaling 42,000,000 with six
156
00:08:54,920 --> 00:08:57,440
hotels.
The debt service coverage below
157
00:08:57,440 --> 00:09:02,000
one point O totaling 99.
So you're, when you think about
158
00:09:02,000 --> 00:09:04,360
debt service coverage, the debt
service coverage is the
159
00:09:04,360 --> 00:09:09,000
definition of how much is my net
operating income, my income
160
00:09:09,000 --> 00:09:13,440
after expenses divided by how
much is, is my debt service.
161
00:09:14,160 --> 00:09:17,640
Well, you're below one O means
you're not paying, You can't pay
162
00:09:17,640 --> 00:09:20,560
your loan.
If you're currently at a
163
00:09:20,560 --> 00:09:25,160
probably a 1.6 O debt service
coverage with an average coupon
164
00:09:25,160 --> 00:09:29,240
of I think it's 5%.
Well, you can't get that today.
165
00:09:29,360 --> 00:09:32,120
So when you go get a new loan,
you're probably going to have to
166
00:09:32,120 --> 00:09:35,400
put money into it.
A lot of the things from COVID,
167
00:09:35,560 --> 00:09:37,920
they, when they made these
extensions, you're like, oh,
168
00:09:38,200 --> 00:09:39,720
this is great.
They're getting me a three-year
169
00:09:39,720 --> 00:09:43,240
extension because they're going
to use all of my product in my
170
00:09:43,240 --> 00:09:45,760
PIP or product improvement plan
money and they're going to use
171
00:09:45,760 --> 00:09:48,920
all my FF and E that I was going
to use to buy carpets and, and,
172
00:09:49,400 --> 00:09:53,320
and furniture.
Well, now and, and, and boy,
173
00:09:53,320 --> 00:09:55,480
this is great.
My franchisor just said I don't
174
00:09:55,480 --> 00:09:59,440
have to do that this year.
Well, guess what, it's 2025
175
00:09:59,440 --> 00:10:02,560
going in 2026 and your, and your
extension's up.
176
00:10:02,560 --> 00:10:05,360
You have no more money in that
Kitty and your franchisor's
177
00:10:05,360 --> 00:10:10,840
going, where's my new stuff?
And so you have to come up with
178
00:10:10,840 --> 00:10:12,400
that.
So either you have to make a
179
00:10:12,400 --> 00:10:16,120
choice, you have to have to work
it out, you have to get the keys
180
00:10:16,120 --> 00:10:19,160
back, you sell it or you
refinance it.
181
00:10:19,160 --> 00:10:22,440
Those are your choices.
I don't know of the choices, I
182
00:10:22,440 --> 00:10:24,600
don't like any of them, but you
know, a long term.
183
00:10:25,800 --> 00:10:28,640
Well, again, you, you are, but
you know, it's, I have a lot of
184
00:10:28,640 --> 00:10:30,320
people.
I have a lot of, I have a lot of
185
00:10:30,320 --> 00:10:33,400
borrowers who have short term
memory loss when it comes to,
186
00:10:33,720 --> 00:10:38,240
oh, when I cash out all that
money at loan closing, which is
187
00:10:38,240 --> 00:10:42,320
tax free.
And I made all this as 10 years,
188
00:10:42,600 --> 00:10:44,880
it's gone.
I'm like, well, you know it.
189
00:10:45,080 --> 00:10:50,400
I, I give the example of this,
you have the, the coolest car in
190
00:10:50,400 --> 00:10:53,480
your garage.
You bought this really cool.
191
00:10:53,480 --> 00:10:56,320
I love Corvette Stingray.
It's like really cool and it's a
192
00:10:56,320 --> 00:10:58,360
really cool color and you buff
it out.
193
00:10:58,360 --> 00:11:01,640
You went out and you got all the
great accessories for it and you
194
00:11:01,640 --> 00:11:04,640
shine it every day and you know
and you're like you're loving it
195
00:11:05,280 --> 00:11:09,520
and you make you got a loan for
this and now you lost your job
196
00:11:09,840 --> 00:11:12,520
and called bank and the bank
says OK, I need my 1:00 and
197
00:11:12,520 --> 00:11:16,080
you're like well, I love this
thing I wanna hold it.
198
00:11:16,120 --> 00:11:19,920
I think it's an heirloom and my
God, like, how could I ever give
199
00:11:19,920 --> 00:11:21,120
this thing up?
And the banks said, well, how
200
00:11:21,120 --> 00:11:23,040
you going to pay me?
Like, well, I can't really pay
201
00:11:23,040 --> 00:11:27,840
you, but I really love this.
Well, guess what, you bark.
202
00:11:28,520 --> 00:11:32,800
And so it's just a matter of
again, how you negotiate.
203
00:11:32,800 --> 00:11:37,880
If the what what we do at Brain
Capital Advisors is we really
204
00:11:38,120 --> 00:11:41,560
the way the borrower doesn't
have a lot of rights because
205
00:11:41,560 --> 00:11:43,000
they don't have a lot of power,
right?
206
00:11:43,000 --> 00:11:45,200
You, you, what's your power?
I, I'm not going to pay you or
207
00:11:45,200 --> 00:11:47,800
I'm going to pay you, right?
I'm going to sue you or I'm
208
00:11:47,800 --> 00:11:49,440
going to pay you.
Those are your two choices.
209
00:11:50,040 --> 00:11:54,040
But you do have an ability to
effectuate your own change.
210
00:11:54,040 --> 00:11:56,760
If you have the right in the in
the other right advisor with
211
00:11:56,760 --> 00:12:00,160
you, because we can tell you
what the parameters of what you
212
00:12:00,160 --> 00:12:02,680
can and can't do.
We can tell you what the market
213
00:12:02,680 --> 00:12:07,120
trends are currently happening.
We could tell you what to expect
214
00:12:07,120 --> 00:12:09,760
when you're going into servicing
your special servicing.
215
00:12:09,760 --> 00:12:12,080
So you know that when you're
going to come fees, how you're
216
00:12:12,080 --> 00:12:15,920
going to incur fees, why to go
in, why to start dialoguing
217
00:12:15,920 --> 00:12:18,520
early.
We start to talk and giving you
218
00:12:18,520 --> 00:12:20,120
and your attorney.
We talked to your attorney to
219
00:12:20,120 --> 00:12:24,120
make sure that there's no risk
of somebody coming after you
220
00:12:24,120 --> 00:12:27,120
personally.
And so we now know how to to
221
00:12:27,120 --> 00:12:29,800
negotiate.
So, and because we understand
222
00:12:29,800 --> 00:12:33,360
the back of the house that, that
side so well, we can kind of
223
00:12:33,360 --> 00:12:36,600
see, and I can't say the whole
thing, but it's like a doctor,
224
00:12:36,600 --> 00:12:38,520
you go to the doctor, you're
like, Hey, I have this rash.
225
00:12:38,520 --> 00:12:39,800
Well, what, what's going to
happen to me?
226
00:12:39,800 --> 00:12:42,840
And you're like, well, I could,
I can't tell what's going to
227
00:12:42,840 --> 00:12:44,880
happen to you, but I can kind of
tell you what's been happening
228
00:12:44,880 --> 00:12:46,280
to other people and along the
way.
229
00:12:46,600 --> 00:12:48,360
So at least you, you're
prepared.
230
00:12:48,680 --> 00:12:51,200
If you follow me on LinkedIn, I
post a lot of stuff.
231
00:12:51,320 --> 00:12:55,240
I always say the same thing.
It's, it's be prepared, be
232
00:12:55,240 --> 00:12:59,960
proactive, because if you're
prepared, then you can actually
233
00:12:59,960 --> 00:13:03,320
pre.
What we do is we make the, the
234
00:13:03,320 --> 00:13:06,960
workout on your terms.
We, we say, OK, this is what
235
00:13:06,960 --> 00:13:09,920
we're going to prepare for you.
We, we're going to, Hey, bank,
236
00:13:10,360 --> 00:13:13,160
We understand these are the four
corners of what we can work in.
237
00:13:13,520 --> 00:13:17,680
This is how we see it.
That's best for us to get a loan
238
00:13:17,680 --> 00:13:22,360
modification or an extension.
If you wait to go on to spend a
239
00:13:22,360 --> 00:13:23,440
lot.
I have a lot of people with
240
00:13:23,440 --> 00:13:26,920
their heads in the sand waiting
to go to the bank and then and
241
00:13:26,920 --> 00:13:29,400
then the the special, once it
gets into special servicing,
242
00:13:29,400 --> 00:13:34,320
they're like, OK, but you waited
this long, so I'm just going to
243
00:13:34,320 --> 00:13:37,720
give you XY and Z and that's it.
Well, what about ABC?
244
00:13:37,720 --> 00:13:39,120
You know what?
Nope.
245
00:13:39,800 --> 00:13:41,080
Too late.
You, you, you.
246
00:13:41,080 --> 00:13:42,640
You had your chance to talk to
us.
247
00:13:42,640 --> 00:13:45,600
You didn't.
Yeah, oof.
248
00:13:47,320 --> 00:13:49,320
Too late.
Let that be a life lesson.
249
00:13:50,000 --> 00:13:52,360
That's just a commercial real
estate secret.
250
00:13:52,680 --> 00:13:56,360
Yeah, it's, it's, it's correct.
The secret, The secret here is,
251
00:13:56,360 --> 00:13:58,320
is communication.
OK.
252
00:13:59,080 --> 00:14:01,960
I was just going to ask you,
what is your commercial real
253
00:14:01,960 --> 00:14:04,880
estate secret?
My commercial real estate secret
254
00:14:04,880 --> 00:14:08,800
is that we have access.
We sell access.
255
00:14:08,960 --> 00:14:13,800
My access is to every every
master CMBS special service and
256
00:14:13,800 --> 00:14:16,240
every CMBS special servicer in
the marketplace.
257
00:14:16,240 --> 00:14:19,120
Why over the last five years
we've delivered really good
258
00:14:19,120 --> 00:14:23,040
product and become very
successful because we understand
259
00:14:23,040 --> 00:14:25,680
our clients needs and we let
them know upfront whether we can
260
00:14:25,680 --> 00:14:27,840
do this or not.
And the servicers understand
261
00:14:27,840 --> 00:14:29,680
that we understand exactly what
they know.
262
00:14:29,680 --> 00:14:33,440
So when we come in and we have a
full package that's socializable
263
00:14:33,440 --> 00:14:36,440
amongst the different parties
because the decision makers sit
264
00:14:36,440 --> 00:14:38,320
in three different companies so
to speak.
265
00:14:38,320 --> 00:14:41,880
You have a master servicer that
can be a Wells Fargo or KeyBank,
266
00:14:42,120 --> 00:14:45,320
but then has to talk to The Who
does administrative things that
267
00:14:45,320 --> 00:14:47,240
if you want to change something
has to go to the special
268
00:14:47,240 --> 00:14:52,080
servicer who can be an LNRKK
Star Rialto.
269
00:14:52,240 --> 00:14:55,640
But then most a lot of times you
have a different bond holder
270
00:14:55,640 --> 00:14:58,160
who's actually the key decision
maker called the controlling
271
00:14:58,160 --> 00:15:01,680
class holder.
So it's a number of it's three
272
00:15:01,680 --> 00:15:04,040
different groups that have to
socialize together.
273
00:15:04,040 --> 00:15:07,520
So if you were able to put a
complete package together and
274
00:15:07,520 --> 00:15:09,920
you're able to put all the
things that the borrower needs
275
00:15:09,920 --> 00:15:14,240
into it and they say like, wow,
this borrower is the best
276
00:15:14,240 --> 00:15:17,640
shepherd to take this through.
This is I want to work with this
277
00:15:17,640 --> 00:15:19,880
borrower because you know what,
this borrower is going to get us
278
00:15:19,880 --> 00:15:22,960
through this then.
And they have to have money and
279
00:15:22,960 --> 00:15:24,920
you have to put more, you have
to bring more equity to the
280
00:15:24,920 --> 00:15:27,280
table.
But if you do that, you're going
281
00:15:27,280 --> 00:15:29,720
to create that.
So why, why Bright Capital?
282
00:15:29,960 --> 00:15:33,360
Because we're not lawyers and
we're not, we're not tax people,
283
00:15:33,360 --> 00:15:35,440
we're not lawyers.
So we keep everything on the
284
00:15:35,440 --> 00:15:38,480
business side.
We know the people internally at
285
00:15:38,480 --> 00:15:41,080
all these services, special
service, they know us, they see
286
00:15:41,080 --> 00:15:43,640
our letterhead.
We get to the top of the pile.
287
00:15:44,680 --> 00:15:46,720
We understand what the issues
are.
288
00:15:46,720 --> 00:15:49,040
We can tell you those issues
from based on all of our
289
00:15:49,040 --> 00:15:51,800
experience.
And honestly, I work with a lot
290
00:15:51,800 --> 00:15:54,640
of these people either for or
with or they work for me in
291
00:15:54,640 --> 00:15:58,040
these, in these seats.
I never go and call the top guy
292
00:15:58,040 --> 00:16:00,520
and say, Hey, I got this deal
coming in, I need you to, to fix
293
00:16:00,520 --> 00:16:02,880
it.
I go through the system and if
294
00:16:02,880 --> 00:16:05,720
there's a problem, we call and
we let those people know and we
295
00:16:05,720 --> 00:16:07,280
can get that attention that we
need.
296
00:16:07,640 --> 00:16:10,960
So it's a awful system.
It's against, it's everything is
297
00:16:10,960 --> 00:16:14,400
backed against the borrower.
It is a it a lot of people call
298
00:16:14,400 --> 00:16:17,880
their attorneys and, and the
attorneys go to against
299
00:16:17,880 --> 00:16:19,280
attorneys.
You're building up legal fees
300
00:16:19,280 --> 00:16:22,920
and it's gone nowhere.
So that's what we do, access
301
00:16:23,360 --> 00:16:26,920
like Dorman.
That was a big secret.
302
00:16:26,920 --> 00:16:30,480
No, Mr. Cohen, I'm only laughing
because this is so much
303
00:16:30,480 --> 00:16:32,040
information.
I don't know if this is going to
304
00:16:32,040 --> 00:16:35,280
be 1 podcast episode or two, but
it's been fantastic.
305
00:16:37,040 --> 00:16:39,120
So thank you for your time.
Yeah.
306
00:16:39,640 --> 00:16:43,080
For the listeners, maybe they
live in Denver and they own an
307
00:16:43,080 --> 00:16:45,280
office building.
Yeah.
308
00:16:45,880 --> 00:16:48,640
Where can they find you, follow
you find Brighton Capital
309
00:16:48,640 --> 00:16:51,760
Advisors, etcetera?
If you go on to the website, if
310
00:16:51,760 --> 00:16:54,720
you actually go into perplexity
or one of the AIS and you typed
311
00:16:54,720 --> 00:16:56,920
in CMBS advisors, our earnings
going to come up.
312
00:16:57,400 --> 00:17:01,520
We post a lot on our website.
So again, I, there's a ton of
313
00:17:01,520 --> 00:17:03,080
information.
So if you go on
314
00:17:03,080 --> 00:17:07,720
brightoncapitaladvisors.com and
you go on actually what we're
315
00:17:07,720 --> 00:17:10,800
starting to do, which you will
be on this is we're starting to
316
00:17:10,800 --> 00:17:14,079
post our podcast.
So you can have different.
317
00:17:14,079 --> 00:17:16,119
So the different people I'm
talking to are asking me
318
00:17:16,119 --> 00:17:17,480
different questions.
You can ask it.
319
00:17:17,480 --> 00:17:20,319
In fact, one of the things we're
putting on our podcast right now
320
00:17:20,640 --> 00:17:23,000
or not on our podcast, but we're
going to put on our stream is
321
00:17:23,839 --> 00:17:26,839
very simple questions of what
should you expect when you're
322
00:17:26,839 --> 00:17:30,280
going into special servicing?
And there's and me and my two
323
00:17:30,280 --> 00:17:33,840
other advisors, We're each
answering that one specific
324
00:17:33,840 --> 00:17:36,680
question because what we want to
do is give you the insight to
325
00:17:36,680 --> 00:17:39,080
know what to expect when you're
when you're doing this.
326
00:17:39,080 --> 00:17:43,040
So, and we also post a lot of
articles where I've been, where
327
00:17:43,040 --> 00:17:46,360
I've been published.
I like and I'm not promoting
328
00:17:46,360 --> 00:17:49,920
myself in these things.
I'm telling people what I'm
329
00:17:49,920 --> 00:17:55,000
seeing on the front lines and
that is the key to the success
330
00:17:55,000 --> 00:17:57,960
of this.
And so if you're in Denver or in
331
00:17:57,960 --> 00:18:00,560
that metro area and you're
saying, well, I have a C, MB S
332
00:18:00,560 --> 00:18:04,560
on that, maybe I have, maybe I
have my reserves that are stuck.
333
00:18:04,760 --> 00:18:08,720
Maybe I got into a debt service
coverage trap trigger worth cash
334
00:18:08,720 --> 00:18:10,000
flow sweep and I can't get out
of it.
335
00:18:10,000 --> 00:18:13,960
But I don't understand why maybe
you want to release a property
336
00:18:13,960 --> 00:18:16,240
and you can't.
Maybe it's a loan assumption
337
00:18:16,240 --> 00:18:19,120
that's stuck.
Maybe you're in some sort of a
338
00:18:19,120 --> 00:18:21,560
default, but you're really not
in the default.
339
00:18:21,760 --> 00:18:24,120
Maybe you're trying to get
something done that is good for
340
00:18:24,120 --> 00:18:25,960
the property, but they won't let
you do it.
341
00:18:26,960 --> 00:18:31,720
Call us because we're the ones
that understand those situations
342
00:18:31,720 --> 00:18:34,840
and how to handle it and tell
you what your best strategy is.
343
00:18:36,280 --> 00:18:39,280
Well, I know who I'm going to
call if I ever.
344
00:18:42,280 --> 00:18:46,520
Not with that product.
Buy Woody Creek Tavern, then I
345
00:18:46,520 --> 00:18:47,760
can.
Then I can kind of hang out with
346
00:18:47,760 --> 00:18:50,000
my buddy Scott.
I would love nothing more than
347
00:18:50,000 --> 00:18:52,160
to own the Woody Creek Tavern,
believe me.
348
00:18:54,160 --> 00:18:55,080
Well.
No, it's me.
349
00:18:55,800 --> 00:19:00,200
It's, it's like it's a fine city
and you know what it it will be,
350
00:19:00,200 --> 00:19:02,680
we're out there.
We're we're nationwide.
351
00:19:02,920 --> 00:19:06,120
We're based in Charlotte, NC.
We're not calling up New York
352
00:19:06,120 --> 00:19:11,480
City numbers, though we are
successfully based to.
353
00:19:11,480 --> 00:19:15,200
So when we work on projects, we
do take a fee upfront, but we do
354
00:19:15,560 --> 00:19:19,120
we, but majority of our fee is
based on your success.
355
00:19:19,480 --> 00:19:21,920
So there's an alignment of
interest everywhere.
356
00:19:23,240 --> 00:19:28,280
I love to hear it.
It sounds like tax abatement,
357
00:19:28,280 --> 00:19:31,680
but that's a whole nother world.
The whole nother world.
358
00:19:31,680 --> 00:19:37,120
This is a little bit like the
big short Bond movie and we just
359
00:19:37,120 --> 00:19:42,920
this is 2 point O just the
differences that the banks
360
00:19:42,920 --> 00:19:45,600
aren't under the stress.
The borrowers are under this
361
00:19:45,600 --> 00:19:49,800
distress.
It's the problem it, it, it's a
362
00:19:49,800 --> 00:19:52,360
problem it and you know, but
there's investors out there that
363
00:19:52,360 --> 00:19:54,880
can actually come in and help
the deal there.
364
00:19:54,880 --> 00:19:57,200
There are borrowers out there
that actually had problem
365
00:19:57,560 --> 00:20:00,760
properties then that that they
can't give the keys back on
366
00:20:00,760 --> 00:20:02,400
because they're going to have a
tax consequence.
367
00:20:02,400 --> 00:20:04,280
So there's ways to figure those
out as well.
368
00:20:05,360 --> 00:20:06,920
And that'll be for the next
episode.
369
00:20:06,920 --> 00:20:11,240
Mr. Cohen, I appreciate your
time today.
370
00:20:11,600 --> 00:20:16,000
Yeah.
For everybody listening, you can
371
00:20:16,000 --> 00:20:22,160
find Mr. Cohen in the show notes
and we'll see you next week.
372
00:20:24,720 --> 00:20:28,480
That's a wrap for this week on
commercial real estate secrets.
373
00:20:29,040 --> 00:20:33,040
If you found value, do us a
favor and subscribe, leave a
374
00:20:33,040 --> 00:20:36,680
review and share it with a
fellow commercial real estate
375
00:20:36,680 --> 00:20:39,240
lover.
For brokerage services or to
376
00:20:39,240 --> 00:20:41,640
connect, visit
warehousehotline.com.
377
00:20:42,360 --> 00:20:44,560
I love you.
We'll see you next week.
00:00:00,040 --> 00:00:02,600
This week on commercial real
estate Secrets, we have Mr.
2
00:00:02,600 --> 00:00:05,960
Michael Cohen.
Michael Cohen is the managing
3
00:00:05,960 --> 00:00:08,880
principal at Brighton Capital
Advisors.
4
00:00:08,880 --> 00:00:10,600
Michael, thank you for being on
the show today.
5
00:00:10,600 --> 00:00:11,960
Thanks.
For having me.
6
00:00:15,280 --> 00:00:17,000
I'm thinking two different
things.
7
00:00:17,000 --> 00:00:19,600
I don't know if I want to go
right or go left, OK, but I'm
8
00:00:19,600 --> 00:00:21,560
going to go right.
And it's random because we
9
00:00:21,560 --> 00:00:23,320
started talking about Woody
Creek, Colorado.
10
00:00:23,840 --> 00:00:27,000
I'm staring at the I love Aspen
commercial real estate.
11
00:00:27,000 --> 00:00:32,360
I'm staring at the market 312 S
Galena goes on the market, The
12
00:00:32,360 --> 00:00:36,600
Prada store.
It's on sale for only $85
13
00:00:36,600 --> 00:00:38,600
million for this little
property.
14
00:00:39,240 --> 00:00:43,520
Can a person get a C MB S loan
on a building like that?
15
00:00:44,320 --> 00:00:47,920
You know, they have, so I there
was actually, so I, I haven't
16
00:00:47,920 --> 00:00:52,880
done any financings or seen the
financing in Aspen as much as
17
00:00:52,880 --> 00:00:55,280
I've seen them done in other
markets.
18
00:00:55,280 --> 00:00:58,880
So I'll give you an example.
We worked on a deal on 5th Ave.
19
00:00:58,880 --> 00:01:04,760
in New York City, very large,
very in the in the gold district
20
00:01:04,760 --> 00:01:09,640
between 50s and 5th Ave. for a
extremely wealthy family.
21
00:01:09,720 --> 00:01:15,840
And the the problem is that the
tenant during COVID left and the
22
00:01:15,840 --> 00:01:19,400
borrower came back and said,
mate that was trying to contact
23
00:01:19,400 --> 00:01:23,240
the lender, the servicer and
say, hey, look, the tenant left.
24
00:01:23,240 --> 00:01:28,000
They owe us $100 million, we're
able to get $95 million.
25
00:01:28,000 --> 00:01:30,840
Are you good with that?
Nobody answered.
26
00:01:31,080 --> 00:01:33,840
So eventually they did it and
then the servicer turns around
27
00:01:33,840 --> 00:01:35,440
and said who told you you could
do that?
28
00:01:36,520 --> 00:01:40,840
So we are this is these are
certain things that you have to
29
00:01:40,840 --> 00:01:43,320
be protected on.
So that's so that's a problem,
30
00:01:43,320 --> 00:01:45,760
right?
But these loans can be done.
31
00:01:46,240 --> 00:01:49,720
It's just a matter of where the
market is today and the leverage
32
00:01:49,720 --> 00:01:52,480
I'm in a bigger deals like that
one.
33
00:01:53,720 --> 00:01:56,320
There's there's a lot of people
that you're the right now
34
00:01:56,320 --> 00:01:58,800
because there's so much
liquidity in the market, meaning
35
00:01:58,800 --> 00:02:01,760
investors have so much free cash
that they could use.
36
00:02:02,240 --> 00:02:04,600
You're actually competing
against somebody who can come in
37
00:02:04,600 --> 00:02:08,800
and say, you know, I'd like that
a lot and I'm just going to buy
38
00:02:08,800 --> 00:02:11,840
it tomorrow and I'm going to I'm
going to buy, I'm going to buy
39
00:02:11,840 --> 00:02:14,320
that all cash.
So the really, really good
40
00:02:14,320 --> 00:02:18,200
properties, those are the ones
that are doing really well.
41
00:02:18,200 --> 00:02:23,200
So I was just on a panel for a
law firm in New York 3 weeks ago
42
00:02:23,200 --> 00:02:27,760
and there was an economist going
to banks on the panel with me.
43
00:02:27,760 --> 00:02:30,040
Said Class A is already
stabilized.
44
00:02:30,040 --> 00:02:34,240
So all the really good
buildings, they're really good
45
00:02:34,240 --> 00:02:36,440
locations.
All of those are, you know,
46
00:02:36,440 --> 00:02:38,400
they're stabilized, they can get
loans.
47
00:02:38,400 --> 00:02:40,640
They're, they're pretty good.
And you're usually when you're
48
00:02:40,640 --> 00:02:43,640
finding you're buying for
location anyway, you're, you're
49
00:02:43,640 --> 00:02:45,840
not over levering it.
You're, you're, you're putting a
50
00:02:45,840 --> 00:02:48,680
50% loan or you're putting
something conservative because
51
00:02:48,680 --> 00:02:51,240
this is maybe a a family thing
and you're, you're just kind of
52
00:02:51,240 --> 00:02:55,520
kicking this down.
Now we're into where Class B, so
53
00:02:55,520 --> 00:02:58,680
that's all B assets.
So that may be a Walmart give up
54
00:02:58,760 --> 00:03:02,040
in the center next to it, which
is so it's not an A, but it's
55
00:03:02,040 --> 00:03:05,640
not A, it's not AC.
So those are stabilizing too.
56
00:03:05,640 --> 00:03:10,040
So what happens now is we get
the distress, but the distress
57
00:03:10,040 --> 00:03:13,000
is a mixed bag of goods.
So the distress can either be,
58
00:03:13,560 --> 00:03:18,080
hey, I just happen to lose this
tenant and I, I had this great
59
00:03:18,080 --> 00:03:21,920
center and the grocery store has
two years left on the lease and
60
00:03:21,920 --> 00:03:24,840
I can't, can't get a renewal
loan for it and I need more
61
00:03:24,840 --> 00:03:27,880
time.
Or it could be, Oh my God, this
62
00:03:27,880 --> 00:03:29,840
thing is like downtown Denver,
right?
63
00:03:29,840 --> 00:03:32,280
And we were looking and we're
talking about this before.
64
00:03:32,280 --> 00:03:37,680
So on the office, the Denver has
the highest percentage of
65
00:03:37,680 --> 00:03:42,000
properties in special servicing
with the debt service coverage
66
00:03:42,000 --> 00:03:49,440
below one O of all the top 25
Msas, which is 39% CMBS loans of
67
00:03:49,440 --> 00:03:53,920
$6.2 billion of total product.
So Denver, downtown.
68
00:03:55,160 --> 00:03:58,240
I Chihuahua.
Yeah, yeah.
69
00:03:58,280 --> 00:04:00,200
I mean, I know, but I didn't
know it was.
70
00:04:01,080 --> 00:04:07,680
It's better it's bad because
you're because now you're it's
71
00:04:07,720 --> 00:04:09,800
in every real estate cycles the
same.
72
00:04:09,920 --> 00:04:13,480
So what what does that mean?
It means that there's always a
73
00:04:13,480 --> 00:04:16,800
flight to quality.
So if there if there's a better
74
00:04:16,800 --> 00:04:20,680
office building for cheaper
price, you're going to go to it.
75
00:04:20,920 --> 00:04:23,480
So what does that mean?
Any building that you didn't
76
00:04:23,480 --> 00:04:26,960
don't like so much, you're not
going to go well, OK, well, what
77
00:04:26,960 --> 00:04:28,160
Well, great.
What are we going to do with
78
00:04:28,160 --> 00:04:30,400
that building?
Well, if it was built before
79
00:04:30,400 --> 00:04:33,040
1985, you can't knock it down it
as asbestos it.
80
00:04:34,680 --> 00:04:37,040
So what are you gonna do with
the suburban office building?
81
00:04:37,440 --> 00:04:41,440
So it, it all becomes how low of
a price you can go.
82
00:04:41,440 --> 00:04:44,040
Chicago's having a a we, we're
doing 2.
83
00:04:44,400 --> 00:04:47,720
We're doing a number of deals in
in Chicago and they're having
84
00:04:47,720 --> 00:04:50,720
the they're having a very big
problem because just like the
85
00:04:51,040 --> 00:04:55,000
residential crisis, if you own
your house, but your neighbor
86
00:04:55,000 --> 00:04:59,160
just foreclosed on both sides of
you, your value is their value.
87
00:04:59,160 --> 00:05:00,720
There's nothing great about your
thing.
88
00:05:00,720 --> 00:05:02,720
It's all commodity.
Wow.
89
00:05:02,720 --> 00:05:06,440
Well, I know that Denver stats
definitely be going to be a clip
90
00:05:06,880 --> 00:05:10,480
that my team makes into a short
because.
91
00:05:11,480 --> 00:05:14,760
Yeah, well, the multifamily is
showing signs of stress as well.
92
00:05:15,880 --> 00:05:18,720
Let's see MSA, I'm just reading
from my notes, it's the seventh
93
00:05:18,720 --> 00:05:21,520
highest number of CMBS
multifamily loans on the watch
94
00:05:21,520 --> 00:05:26,320
list, which is 162 properties of
the in poor 2.9 billion.
95
00:05:26,880 --> 00:05:30,320
They have another 238 million in
delinquent multifamily loans,
96
00:05:30,320 --> 00:05:36,760
which is the top, 10th highest
of all top 25 Msas and a total
97
00:05:36,760 --> 00:05:40,240
of $2.3 billion of loan with a
with a debt service coverage of
98
00:05:40,240 --> 00:05:43,000
11 point or below, which is the
12th highest.
99
00:05:43,320 --> 00:05:48,720
So there's a lot of problems.
Nobody the press doesn't like to
100
00:05:48,720 --> 00:05:51,160
talk about problems that some
things they don't, sometimes
101
00:05:51,160 --> 00:05:53,800
they don't, but they like to
talk about green shoots.
102
00:05:53,800 --> 00:05:57,480
If you ever had a long with
green shoots and but the green
103
00:05:57,480 --> 00:06:00,080
shoots are there for longer
than, I don't know, a month or
104
00:06:00,080 --> 00:06:02,200
two months, they're kind of like
those aren't green sheets.
105
00:06:02,200 --> 00:06:05,480
Those are a problem that's going
to last us for a while.
106
00:06:07,160 --> 00:06:10,880
It's a matter of when the banks
and the insurance companies and
107
00:06:10,880 --> 00:06:13,960
the CMBS wants.
Who wants to take the loss when
108
00:06:14,480 --> 00:06:19,240
is really the question.
So hypothetically, if everybody
109
00:06:19,240 --> 00:06:22,080
takes the loss at the same time,
that's when we find ourselves in
110
00:06:22,080 --> 00:06:25,040
another financial crisis.
We we will if if the government
111
00:06:25,040 --> 00:06:29,160
were to say if if I I got
waiting for this and the
112
00:06:29,160 --> 00:06:33,720
government don't always say the
government in in any
113
00:06:33,720 --> 00:06:36,400
environment, political
environment is is doing well,
114
00:06:36,400 --> 00:06:37,720
right.
They deliver my mail.
115
00:06:37,720 --> 00:06:41,960
I'm kind of happy.
So if, but if you have a
116
00:06:41,960 --> 00:06:46,120
scenario where the government
has been doing a good job of
117
00:06:46,720 --> 00:06:50,960
keeping the banks from panicking
and dumping because if one bank
118
00:06:50,960 --> 00:06:53,480
dumps, it's a race to the
bottom.
119
00:06:53,520 --> 00:06:56,320
And that's what they could have
done this during COVID, right,
120
00:06:56,320 --> 00:06:58,400
Because banks were like, God, we
have this.
121
00:06:58,400 --> 00:06:59,760
We don't nobody's already gonna
go back.
122
00:06:59,920 --> 00:07:02,840
There was saying, I remember in
COVID, people are like who's
123
00:07:02,840 --> 00:07:05,000
ever gonna go back to a
university, right.
124
00:07:05,000 --> 00:07:07,920
You know, who's like, you know,
we, we went to all draconian
125
00:07:07,920 --> 00:07:11,200
things.
And so by keeping them alive,
126
00:07:11,200 --> 00:07:13,440
we're not we're we're slowly
letting this.
127
00:07:13,440 --> 00:07:15,200
But what's happening behind the
scenes?
128
00:07:15,520 --> 00:07:18,840
And I travel around the country
and I speak in a lot of places
129
00:07:18,840 --> 00:07:22,800
and I speak to the press, I
speak to market participants, I
130
00:07:22,800 --> 00:07:25,240
speak to law firms.
We've, we've probably done over
131
00:07:25,720 --> 00:07:29,520
30 different presentations on
CMBS to the major law firms in
132
00:07:29,520 --> 00:07:34,240
the around the country offices.
Because again, we know something
133
00:07:34,240 --> 00:07:37,280
that we're just in the front
line and people don't understand
134
00:07:37,680 --> 00:07:40,200
what the depth of the iceberg is
here.
135
00:07:40,200 --> 00:07:45,160
And you, you, you find that
there's a number of these
136
00:07:45,160 --> 00:07:49,360
private equity firms that have
billions of dollars that are
137
00:07:49,360 --> 00:07:51,880
already buying pools of loans
from banks.
138
00:07:53,360 --> 00:07:56,080
And because the banks aren't
putting out the loans all at
139
00:07:56,080 --> 00:07:59,960
once, creating a, a frenzy and
a, and a kind of a, a piranha
140
00:07:59,960 --> 00:08:03,520
tank, that the values are
staying higher because they put
141
00:08:03,520 --> 00:08:06,280
out one thing at a time and
everybody fights over it and
142
00:08:06,280 --> 00:08:09,480
bids up the bids up the credit.
So you've got a lot of hungry
143
00:08:09,480 --> 00:08:12,240
investors out there that are
dying to put money to work.
144
00:08:13,400 --> 00:08:14,680
And I thought it was the same
thing.
145
00:08:15,760 --> 00:08:17,680
Be patient because we're not
there yet.
146
00:08:18,120 --> 00:08:22,040
And and because again, if you go
out and you think you've got a
147
00:08:22,040 --> 00:08:25,000
great deal, if that building
next door goes under, you just
148
00:08:25,000 --> 00:08:29,480
lost your equity value.
Hi, Chihuahua.
149
00:08:30,080 --> 00:08:33,520
Yeah.
So then then just to top it off,
150
00:08:34,159 --> 00:08:36,159
your hotels are not so great
either in Denver.
151
00:08:36,200 --> 00:08:39,799
Sorry.
Hospitality is another worrisome
152
00:08:39,799 --> 00:08:43,640
area for Denver with 43% of its
hospitality loans have been
153
00:08:43,640 --> 00:08:46,960
watch listed.
It's 20 loans or 390 million
154
00:08:47,240 --> 00:08:51,000
that's the fifth highest of all
the top 25 Msas and there are 5
155
00:08:51,000 --> 00:08:54,920
hotel loans currently delinquent
totaling 42,000,000 with six
156
00:08:54,920 --> 00:08:57,440
hotels.
The debt service coverage below
157
00:08:57,440 --> 00:09:02,000
one point O totaling 99.
So you're, when you think about
158
00:09:02,000 --> 00:09:04,360
debt service coverage, the debt
service coverage is the
159
00:09:04,360 --> 00:09:09,000
definition of how much is my net
operating income, my income
160
00:09:09,000 --> 00:09:13,440
after expenses divided by how
much is, is my debt service.
161
00:09:14,160 --> 00:09:17,640
Well, you're below one O means
you're not paying, You can't pay
162
00:09:17,640 --> 00:09:20,560
your loan.
If you're currently at a
163
00:09:20,560 --> 00:09:25,160
probably a 1.6 O debt service
coverage with an average coupon
164
00:09:25,160 --> 00:09:29,240
of I think it's 5%.
Well, you can't get that today.
165
00:09:29,360 --> 00:09:32,120
So when you go get a new loan,
you're probably going to have to
166
00:09:32,120 --> 00:09:35,400
put money into it.
A lot of the things from COVID,
167
00:09:35,560 --> 00:09:37,920
they, when they made these
extensions, you're like, oh,
168
00:09:38,200 --> 00:09:39,720
this is great.
They're getting me a three-year
169
00:09:39,720 --> 00:09:43,240
extension because they're going
to use all of my product in my
170
00:09:43,240 --> 00:09:45,760
PIP or product improvement plan
money and they're going to use
171
00:09:45,760 --> 00:09:48,920
all my FF and E that I was going
to use to buy carpets and, and,
172
00:09:49,400 --> 00:09:53,320
and furniture.
Well, now and, and, and boy,
173
00:09:53,320 --> 00:09:55,480
this is great.
My franchisor just said I don't
174
00:09:55,480 --> 00:09:59,440
have to do that this year.
Well, guess what, it's 2025
175
00:09:59,440 --> 00:10:02,560
going in 2026 and your, and your
extension's up.
176
00:10:02,560 --> 00:10:05,360
You have no more money in that
Kitty and your franchisor's
177
00:10:05,360 --> 00:10:10,840
going, where's my new stuff?
And so you have to come up with
178
00:10:10,840 --> 00:10:12,400
that.
So either you have to make a
179
00:10:12,400 --> 00:10:16,120
choice, you have to have to work
it out, you have to get the keys
180
00:10:16,120 --> 00:10:19,160
back, you sell it or you
refinance it.
181
00:10:19,160 --> 00:10:22,440
Those are your choices.
I don't know of the choices, I
182
00:10:22,440 --> 00:10:24,600
don't like any of them, but you
know, a long term.
183
00:10:25,800 --> 00:10:28,640
Well, again, you, you are, but
you know, it's, I have a lot of
184
00:10:28,640 --> 00:10:30,320
people.
I have a lot of, I have a lot of
185
00:10:30,320 --> 00:10:33,400
borrowers who have short term
memory loss when it comes to,
186
00:10:33,720 --> 00:10:38,240
oh, when I cash out all that
money at loan closing, which is
187
00:10:38,240 --> 00:10:42,320
tax free.
And I made all this as 10 years,
188
00:10:42,600 --> 00:10:44,880
it's gone.
I'm like, well, you know it.
189
00:10:45,080 --> 00:10:50,400
I, I give the example of this,
you have the, the coolest car in
190
00:10:50,400 --> 00:10:53,480
your garage.
You bought this really cool.
191
00:10:53,480 --> 00:10:56,320
I love Corvette Stingray.
It's like really cool and it's a
192
00:10:56,320 --> 00:10:58,360
really cool color and you buff
it out.
193
00:10:58,360 --> 00:11:01,640
You went out and you got all the
great accessories for it and you
194
00:11:01,640 --> 00:11:04,640
shine it every day and you know
and you're like you're loving it
195
00:11:05,280 --> 00:11:09,520
and you make you got a loan for
this and now you lost your job
196
00:11:09,840 --> 00:11:12,520
and called bank and the bank
says OK, I need my 1:00 and
197
00:11:12,520 --> 00:11:16,080
you're like well, I love this
thing I wanna hold it.
198
00:11:16,120 --> 00:11:19,920
I think it's an heirloom and my
God, like, how could I ever give
199
00:11:19,920 --> 00:11:21,120
this thing up?
And the banks said, well, how
200
00:11:21,120 --> 00:11:23,040
you going to pay me?
Like, well, I can't really pay
201
00:11:23,040 --> 00:11:27,840
you, but I really love this.
Well, guess what, you bark.
202
00:11:28,520 --> 00:11:32,800
And so it's just a matter of
again, how you negotiate.
203
00:11:32,800 --> 00:11:37,880
If the what what we do at Brain
Capital Advisors is we really
204
00:11:38,120 --> 00:11:41,560
the way the borrower doesn't
have a lot of rights because
205
00:11:41,560 --> 00:11:43,000
they don't have a lot of power,
right?
206
00:11:43,000 --> 00:11:45,200
You, you, what's your power?
I, I'm not going to pay you or
207
00:11:45,200 --> 00:11:47,800
I'm going to pay you, right?
I'm going to sue you or I'm
208
00:11:47,800 --> 00:11:49,440
going to pay you.
Those are your two choices.
209
00:11:50,040 --> 00:11:54,040
But you do have an ability to
effectuate your own change.
210
00:11:54,040 --> 00:11:56,760
If you have the right in the in
the other right advisor with
211
00:11:56,760 --> 00:12:00,160
you, because we can tell you
what the parameters of what you
212
00:12:00,160 --> 00:12:02,680
can and can't do.
We can tell you what the market
213
00:12:02,680 --> 00:12:07,120
trends are currently happening.
We could tell you what to expect
214
00:12:07,120 --> 00:12:09,760
when you're going into servicing
your special servicing.
215
00:12:09,760 --> 00:12:12,080
So you know that when you're
going to come fees, how you're
216
00:12:12,080 --> 00:12:15,920
going to incur fees, why to go
in, why to start dialoguing
217
00:12:15,920 --> 00:12:18,520
early.
We start to talk and giving you
218
00:12:18,520 --> 00:12:20,120
and your attorney.
We talked to your attorney to
219
00:12:20,120 --> 00:12:24,120
make sure that there's no risk
of somebody coming after you
220
00:12:24,120 --> 00:12:27,120
personally.
And so we now know how to to
221
00:12:27,120 --> 00:12:29,800
negotiate.
So, and because we understand
222
00:12:29,800 --> 00:12:33,360
the back of the house that, that
side so well, we can kind of
223
00:12:33,360 --> 00:12:36,600
see, and I can't say the whole
thing, but it's like a doctor,
224
00:12:36,600 --> 00:12:38,520
you go to the doctor, you're
like, Hey, I have this rash.
225
00:12:38,520 --> 00:12:39,800
Well, what, what's going to
happen to me?
226
00:12:39,800 --> 00:12:42,840
And you're like, well, I could,
I can't tell what's going to
227
00:12:42,840 --> 00:12:44,880
happen to you, but I can kind of
tell you what's been happening
228
00:12:44,880 --> 00:12:46,280
to other people and along the
way.
229
00:12:46,600 --> 00:12:48,360
So at least you, you're
prepared.
230
00:12:48,680 --> 00:12:51,200
If you follow me on LinkedIn, I
post a lot of stuff.
231
00:12:51,320 --> 00:12:55,240
I always say the same thing.
It's, it's be prepared, be
232
00:12:55,240 --> 00:12:59,960
proactive, because if you're
prepared, then you can actually
233
00:12:59,960 --> 00:13:03,320
pre.
What we do is we make the, the
234
00:13:03,320 --> 00:13:06,960
workout on your terms.
We, we say, OK, this is what
235
00:13:06,960 --> 00:13:09,920
we're going to prepare for you.
We, we're going to, Hey, bank,
236
00:13:10,360 --> 00:13:13,160
We understand these are the four
corners of what we can work in.
237
00:13:13,520 --> 00:13:17,680
This is how we see it.
That's best for us to get a loan
238
00:13:17,680 --> 00:13:22,360
modification or an extension.
If you wait to go on to spend a
239
00:13:22,360 --> 00:13:23,440
lot.
I have a lot of people with
240
00:13:23,440 --> 00:13:26,920
their heads in the sand waiting
to go to the bank and then and
241
00:13:26,920 --> 00:13:29,400
then the the special, once it
gets into special servicing,
242
00:13:29,400 --> 00:13:34,320
they're like, OK, but you waited
this long, so I'm just going to
243
00:13:34,320 --> 00:13:37,720
give you XY and Z and that's it.
Well, what about ABC?
244
00:13:37,720 --> 00:13:39,120
You know what?
Nope.
245
00:13:39,800 --> 00:13:41,080
Too late.
You, you, you.
246
00:13:41,080 --> 00:13:42,640
You had your chance to talk to
us.
247
00:13:42,640 --> 00:13:45,600
You didn't.
Yeah, oof.
248
00:13:47,320 --> 00:13:49,320
Too late.
Let that be a life lesson.
249
00:13:50,000 --> 00:13:52,360
That's just a commercial real
estate secret.
250
00:13:52,680 --> 00:13:56,360
Yeah, it's, it's, it's correct.
The secret, The secret here is,
251
00:13:56,360 --> 00:13:58,320
is communication.
OK.
252
00:13:59,080 --> 00:14:01,960
I was just going to ask you,
what is your commercial real
253
00:14:01,960 --> 00:14:04,880
estate secret?
My commercial real estate secret
254
00:14:04,880 --> 00:14:08,800
is that we have access.
We sell access.
255
00:14:08,960 --> 00:14:13,800
My access is to every every
master CMBS special service and
256
00:14:13,800 --> 00:14:16,240
every CMBS special servicer in
the marketplace.
257
00:14:16,240 --> 00:14:19,120
Why over the last five years
we've delivered really good
258
00:14:19,120 --> 00:14:23,040
product and become very
successful because we understand
259
00:14:23,040 --> 00:14:25,680
our clients needs and we let
them know upfront whether we can
260
00:14:25,680 --> 00:14:27,840
do this or not.
And the servicers understand
261
00:14:27,840 --> 00:14:29,680
that we understand exactly what
they know.
262
00:14:29,680 --> 00:14:33,440
So when we come in and we have a
full package that's socializable
263
00:14:33,440 --> 00:14:36,440
amongst the different parties
because the decision makers sit
264
00:14:36,440 --> 00:14:38,320
in three different companies so
to speak.
265
00:14:38,320 --> 00:14:41,880
You have a master servicer that
can be a Wells Fargo or KeyBank,
266
00:14:42,120 --> 00:14:45,320
but then has to talk to The Who
does administrative things that
267
00:14:45,320 --> 00:14:47,240
if you want to change something
has to go to the special
268
00:14:47,240 --> 00:14:52,080
servicer who can be an LNRKK
Star Rialto.
269
00:14:52,240 --> 00:14:55,640
But then most a lot of times you
have a different bond holder
270
00:14:55,640 --> 00:14:58,160
who's actually the key decision
maker called the controlling
271
00:14:58,160 --> 00:15:01,680
class holder.
So it's a number of it's three
272
00:15:01,680 --> 00:15:04,040
different groups that have to
socialize together.
273
00:15:04,040 --> 00:15:07,520
So if you were able to put a
complete package together and
274
00:15:07,520 --> 00:15:09,920
you're able to put all the
things that the borrower needs
275
00:15:09,920 --> 00:15:14,240
into it and they say like, wow,
this borrower is the best
276
00:15:14,240 --> 00:15:17,640
shepherd to take this through.
This is I want to work with this
277
00:15:17,640 --> 00:15:19,880
borrower because you know what,
this borrower is going to get us
278
00:15:19,880 --> 00:15:22,960
through this then.
And they have to have money and
279
00:15:22,960 --> 00:15:24,920
you have to put more, you have
to bring more equity to the
280
00:15:24,920 --> 00:15:27,280
table.
But if you do that, you're going
281
00:15:27,280 --> 00:15:29,720
to create that.
So why, why Bright Capital?
282
00:15:29,960 --> 00:15:33,360
Because we're not lawyers and
we're not, we're not tax people,
283
00:15:33,360 --> 00:15:35,440
we're not lawyers.
So we keep everything on the
284
00:15:35,440 --> 00:15:38,480
business side.
We know the people internally at
285
00:15:38,480 --> 00:15:41,080
all these services, special
service, they know us, they see
286
00:15:41,080 --> 00:15:43,640
our letterhead.
We get to the top of the pile.
287
00:15:44,680 --> 00:15:46,720
We understand what the issues
are.
288
00:15:46,720 --> 00:15:49,040
We can tell you those issues
from based on all of our
289
00:15:49,040 --> 00:15:51,800
experience.
And honestly, I work with a lot
290
00:15:51,800 --> 00:15:54,640
of these people either for or
with or they work for me in
291
00:15:54,640 --> 00:15:58,040
these, in these seats.
I never go and call the top guy
292
00:15:58,040 --> 00:16:00,520
and say, Hey, I got this deal
coming in, I need you to, to fix
293
00:16:00,520 --> 00:16:02,880
it.
I go through the system and if
294
00:16:02,880 --> 00:16:05,720
there's a problem, we call and
we let those people know and we
295
00:16:05,720 --> 00:16:07,280
can get that attention that we
need.
296
00:16:07,640 --> 00:16:10,960
So it's a awful system.
It's against, it's everything is
297
00:16:10,960 --> 00:16:14,400
backed against the borrower.
It is a it a lot of people call
298
00:16:14,400 --> 00:16:17,880
their attorneys and, and the
attorneys go to against
299
00:16:17,880 --> 00:16:19,280
attorneys.
You're building up legal fees
300
00:16:19,280 --> 00:16:22,920
and it's gone nowhere.
So that's what we do, access
301
00:16:23,360 --> 00:16:26,920
like Dorman.
That was a big secret.
302
00:16:26,920 --> 00:16:30,480
No, Mr. Cohen, I'm only laughing
because this is so much
303
00:16:30,480 --> 00:16:32,040
information.
I don't know if this is going to
304
00:16:32,040 --> 00:16:35,280
be 1 podcast episode or two, but
it's been fantastic.
305
00:16:37,040 --> 00:16:39,120
So thank you for your time.
Yeah.
306
00:16:39,640 --> 00:16:43,080
For the listeners, maybe they
live in Denver and they own an
307
00:16:43,080 --> 00:16:45,280
office building.
Yeah.
308
00:16:45,880 --> 00:16:48,640
Where can they find you, follow
you find Brighton Capital
309
00:16:48,640 --> 00:16:51,760
Advisors, etcetera?
If you go on to the website, if
310
00:16:51,760 --> 00:16:54,720
you actually go into perplexity
or one of the AIS and you typed
311
00:16:54,720 --> 00:16:56,920
in CMBS advisors, our earnings
going to come up.
312
00:16:57,400 --> 00:17:01,520
We post a lot on our website.
So again, I, there's a ton of
313
00:17:01,520 --> 00:17:03,080
information.
So if you go on
314
00:17:03,080 --> 00:17:07,720
brightoncapitaladvisors.com and
you go on actually what we're
315
00:17:07,720 --> 00:17:10,800
starting to do, which you will
be on this is we're starting to
316
00:17:10,800 --> 00:17:14,079
post our podcast.
So you can have different.
317
00:17:14,079 --> 00:17:16,119
So the different people I'm
talking to are asking me
318
00:17:16,119 --> 00:17:17,480
different questions.
You can ask it.
319
00:17:17,480 --> 00:17:20,319
In fact, one of the things we're
putting on our podcast right now
320
00:17:20,640 --> 00:17:23,000
or not on our podcast, but we're
going to put on our stream is
321
00:17:23,839 --> 00:17:26,839
very simple questions of what
should you expect when you're
322
00:17:26,839 --> 00:17:30,280
going into special servicing?
And there's and me and my two
323
00:17:30,280 --> 00:17:33,840
other advisors, We're each
answering that one specific
324
00:17:33,840 --> 00:17:36,680
question because what we want to
do is give you the insight to
325
00:17:36,680 --> 00:17:39,080
know what to expect when you're
when you're doing this.
326
00:17:39,080 --> 00:17:43,040
So, and we also post a lot of
articles where I've been, where
327
00:17:43,040 --> 00:17:46,360
I've been published.
I like and I'm not promoting
328
00:17:46,360 --> 00:17:49,920
myself in these things.
I'm telling people what I'm
329
00:17:49,920 --> 00:17:55,000
seeing on the front lines and
that is the key to the success
330
00:17:55,000 --> 00:17:57,960
of this.
And so if you're in Denver or in
331
00:17:57,960 --> 00:18:00,560
that metro area and you're
saying, well, I have a C, MB S
332
00:18:00,560 --> 00:18:04,560
on that, maybe I have, maybe I
have my reserves that are stuck.
333
00:18:04,760 --> 00:18:08,720
Maybe I got into a debt service
coverage trap trigger worth cash
334
00:18:08,720 --> 00:18:10,000
flow sweep and I can't get out
of it.
335
00:18:10,000 --> 00:18:13,960
But I don't understand why maybe
you want to release a property
336
00:18:13,960 --> 00:18:16,240
and you can't.
Maybe it's a loan assumption
337
00:18:16,240 --> 00:18:19,120
that's stuck.
Maybe you're in some sort of a
338
00:18:19,120 --> 00:18:21,560
default, but you're really not
in the default.
339
00:18:21,760 --> 00:18:24,120
Maybe you're trying to get
something done that is good for
340
00:18:24,120 --> 00:18:25,960
the property, but they won't let
you do it.
341
00:18:26,960 --> 00:18:31,720
Call us because we're the ones
that understand those situations
342
00:18:31,720 --> 00:18:34,840
and how to handle it and tell
you what your best strategy is.
343
00:18:36,280 --> 00:18:39,280
Well, I know who I'm going to
call if I ever.
344
00:18:42,280 --> 00:18:46,520
Not with that product.
Buy Woody Creek Tavern, then I
345
00:18:46,520 --> 00:18:47,760
can.
Then I can kind of hang out with
346
00:18:47,760 --> 00:18:50,000
my buddy Scott.
I would love nothing more than
347
00:18:50,000 --> 00:18:52,160
to own the Woody Creek Tavern,
believe me.
348
00:18:54,160 --> 00:18:55,080
Well.
No, it's me.
349
00:18:55,800 --> 00:19:00,200
It's, it's like it's a fine city
and you know what it it will be,
350
00:19:00,200 --> 00:19:02,680
we're out there.
We're we're nationwide.
351
00:19:02,920 --> 00:19:06,120
We're based in Charlotte, NC.
We're not calling up New York
352
00:19:06,120 --> 00:19:11,480
City numbers, though we are
successfully based to.
353
00:19:11,480 --> 00:19:15,200
So when we work on projects, we
do take a fee upfront, but we do
354
00:19:15,560 --> 00:19:19,120
we, but majority of our fee is
based on your success.
355
00:19:19,480 --> 00:19:21,920
So there's an alignment of
interest everywhere.
356
00:19:23,240 --> 00:19:28,280
I love to hear it.
It sounds like tax abatement,
357
00:19:28,280 --> 00:19:31,680
but that's a whole nother world.
The whole nother world.
358
00:19:31,680 --> 00:19:37,120
This is a little bit like the
big short Bond movie and we just
359
00:19:37,120 --> 00:19:42,920
this is 2 point O just the
differences that the banks
360
00:19:42,920 --> 00:19:45,600
aren't under the stress.
The borrowers are under this
361
00:19:45,600 --> 00:19:49,800
distress.
It's the problem it, it, it's a
362
00:19:49,800 --> 00:19:52,360
problem it and you know, but
there's investors out there that
363
00:19:52,360 --> 00:19:54,880
can actually come in and help
the deal there.
364
00:19:54,880 --> 00:19:57,200
There are borrowers out there
that actually had problem
365
00:19:57,560 --> 00:20:00,760
properties then that that they
can't give the keys back on
366
00:20:00,760 --> 00:20:02,400
because they're going to have a
tax consequence.
367
00:20:02,400 --> 00:20:04,280
So there's ways to figure those
out as well.
368
00:20:05,360 --> 00:20:06,920
And that'll be for the next
episode.
369
00:20:06,920 --> 00:20:11,240
Mr. Cohen, I appreciate your
time today.
370
00:20:11,600 --> 00:20:16,000
Yeah.
For everybody listening, you can
371
00:20:16,000 --> 00:20:22,160
find Mr. Cohen in the show notes
and we'll see you next week.
372
00:20:24,720 --> 00:20:28,480
That's a wrap for this week on
commercial real estate secrets.
373
00:20:29,040 --> 00:20:33,040
If you found value, do us a
favor and subscribe, leave a
374
00:20:33,040 --> 00:20:36,680
review and share it with a
fellow commercial real estate
375
00:20:36,680 --> 00:20:39,240
lover.
For brokerage services or to
376
00:20:39,240 --> 00:20:41,640
connect, visit
warehousehotline.com.
377
00:20:42,360 --> 00:20:44,560
I love you.
We'll see you next week.
