Loan workout
Brighton Capital Advisors
Brighton Capital Advisors is a commercial real estate finance advisory firm in Charlotte, North Carolina that represents borrowers in dealings with CMBS loan servicers. Its work covers restructuring, workouts and recapitalisation, as well as placing replacement debt and equity.
Engagements start with the loan documents and property cash flows. The firm prepares the borrower's case for the servicer and negotiates outcomes including maturity extensions, loan assumptions, conditional debt forgiveness, release of trapped reserve funds, discounted payoffs, participating interest hope notes, A/B note splits and new equity injections. Its process page states that fees are based on results and aligned with the borrower's interests, and that each advisor is involved in every assignment.
BCA was founded in November 2020. It says its advisors each have 20+ years of experience and have structured, closed and managed more than $50 billion across CMBS platforms, with senior bankers who were previously regional directors at major CMBS banking shops, plus a former CMBS attorney and a former special servicer. The contact page lists Charlotte, New York and Dallas, and the firm says it covers all commercial property types.
Fees are quoted per assignment and are not published. Before engaging, confirm which servicer currently holds the loan, what the fee structure is at each outcome, and what special servicing fees and third-party costs an appraisal or environmental report would add.
Best for
Owners of CMBS-financed commercial property facing maturity, default or a servicer negotiation who want a borrower-side advocate rather than approaching the special servicer alone.
What they do
- CMBS loan modifications
- Maturity extensions
- Loan assumptions
- Discounted payoffs
- Release of trapped reserve funds
- A/B note splits and hope notes
- Debt and equity placement
- Pre-default strategy and servicer negotiation
Details
| Attribute | Value |
|---|---|
| Founded | 2020 |
| Other offices | New York, NY, Dallas, TX |
What stands out
- Founded in November 2020 to represent CMBS borrowers in servicing negotiations.
- Says its advisors have each structured, closed and managed more than $50 billion across CMBS platforms.
- Lists offices in Charlotte, New York and Dallas.
- States that its fees are based on results rather than fixed hourly billing.
Common questions
- Who should a borrower contact about a distressed CMBS loan?
- Start with the servicer you send loan payments to. BCA explains that there are three servicer types: a sub servicer, whose authority is limited to document administration; a master servicer, which handles documents, collections, covenant tests, tax and insurance payments and reserves under the Pooling and Servicing Agreement; and a special servicer, which decides anything outside the master servicer's authority.
- What should be sent to the servicer to present a case?
- A two-sentence proposal email will not get a request reviewed quickly. BCA advises submitting a presentation that anticipates the servicer's questions and documentation needs and can be analysed quickly, which gives the request a better chance of timely review.
- What issues are non-starters in a CMBS modification?
- Because any modification affects the whole REMIC trust, requests a balance sheet lender might allow can be blocked by REMIC rules and the Pooling and Servicing Agreement. BCA lists probable non-starters as additional borrower debt not already provided for in the loan documents, long-term extensions without a capital infusion, and a change of use of the collateral.
- What does defeasance cost?
- Defeasance substitutes government securities, typically US treasuries, for the real estate collateral so they mimic the loan payments. BCA notes that in some rate environments the securities needed cost more than the outstanding loan balance, producing a defeasance premium, and that the borrower also pays servicer costs and related expenses that typically total in the $30,000 to $50,000 range.