During the 2008 recession, our founder was challenged with saving a sizable equity fund from a meltdown that would result in a complete loss for investors. The fund’s three-million square foot Dallas portfolio had been financed with $340 million in senior and mezzanine debt. Liquidity evaporated during the crisis. Cash flow came under additional pressure as some key tenants did not renew their leases. The sponsor could not re-tenant vacancies because no funds were available for improvements in what became a very slow leasing market. A loan default was almost inevitable, threatening a collapse of the entire company.
Within a few months, our team won the confidence of the senior lender through regular communications, sensible plans and creativity. When the mezzanine lender made a powerplay to take control of the assets, the senior lender sided with us. Through swift outmaneuvering, we bought the junior debt for pennies on the dollar. We then completed a restructuring of the senior loan, providing new funding for improvements and leasing costs. With this material competitive advantage, we completed some of the most significant lease transactions in Dallas at the time.
While many lost their heads in 2008, we pulled off a loan restructuring thought to be impossible. We attribute it to character. We worked tirelessly and kept our promises. We placed investor interests before our own and our commitment won the trust of our lenders, brokers, tenants, and building service providers.
