What happens when your commercial property can no longer generate enough income to cover its debt, and refinancing isn’t an option?
For commercial real estate owners, financial distress doesn’t always mean a property is a bad investment. A major tenant leaving, declining property values, higher interest rates, or an approaching loan maturity can create serious challenges, even for properties that previously performed well.
But when that property is financed through a commercial mortgage-backed securities (CMBS) loan, resolving those challenges can become significantly more complicated.
Unlike traditional bank financing, CMBS loans involve multiple parties, servicing agreements, and bondholder interests. Understanding how to navigate that structure before a loan enters special servicing can make a meaningful difference in the options available to borrowers.
In this episode, Aviva Sonenreich and Michael Cohen, Managing Principal of Brighton Capital Advisors, discuss CMBS loan workouts, distressed commercial real estate, loan modifications, and the challenges facing commercial property owners navigating today’s debt markets.
Using Denver as an example, Michael discusses CMBS loan performance indicators, including delinquency, watchlist activity, and debt service coverage ratios. He explains why certain commercial properties are experiencing financial stress while higher-quality assets in desirable locations continue to attract financing and investor interest.
Aviva and Michael explore how commercial real estate loan maturities, refinancing challenges, declining property values, and tenant vacancies can push otherwise viable investments into distress.
The conversation examines how CMBS master servicers, special servicers, and controlling class bondholders influence loan workout negotiations, and why borrowers need to understand the decision-making process before requesting changes to their financing arrangements.
They also discuss the role of private equity in distressed commercial real estate, why investors are pursuing opportunities involving troubled loans, and how distressed property sales can affect surrounding real estate values.
For commercial property owners, real estate investors, borrowers, and professionals navigating commercial real estate debt, this episode offers practical insights into CMBS loan modifications, special servicing, distressed property investments, and strategies for approaching commercial real estate financing challenges.
This is Part 2 of Aviva’s conversation with Michael Cohen. For an introduction to commercial mortgage-backed securities, listen to Part 1, CMBS Loans Explained: What Commercial Real Estate Investors Need to Know.
Key Topics Discussed
- Why commercial real estate properties become distressed and how CMBS loans complicate the process
- What CMBS loan data reveals about financial pressure in Denver’s office, multifamily, and hospitality markets
- How tenant vacancies, declining property values, and refinancing challenges affect commercial real estate investments
- Understanding debt service coverage ratios and their importance in commercial property financing
- Why upcoming commercial real estate loan maturities can create problems for property owners
- How CMBS loan workouts, modifications, and extensions can help borrowers address financial challenges
- Why proactive communication with loan servicers matters before a property enters special servicing
- How master servicers, special servicers, and controlling class bondholders influence loan negotiations
- The role of private equity investors in distressed commercial real estate loans and property acquisitions
- How commercial property owners can prepare for loan negotiations and evaluate their options before financial problems escalate
About the Guest
Michael Cohen is the Managing Principal of Brighton Capital Advisors, a commercial real estate advisory firm specializing in complex loan restructuring, workouts, and debt resolution. With expertise in commercial mortgage-backed securities (CMBS), life insurance company loans, and bank financing, Michael helps property owners and borrowers navigate challenging loan situations and align debt obligations with property performance. His work involves navigating the complexities of loan servicing, lender negotiations, and CMBS structures, including servicer, bondholder, and rating agency requirements. Through Brighton Capital Advisors, Michael helps clients evaluate restructuring options, resolve distressed loan issues, and pursue practical, cost-effective solutions that protect their real estate investments.
About the Host
Aviva Sonenreich is the Managing Broker and Owner of the Warehouse Hotline, a Denver commercial real estate brokerage specializing exclusively in industrial properties. She leads the firm’s brokerage operations, negotiates industrial sales and leasing transactions, advises clients on acquisition and disposition strategies, and oversees the company’s marketing and business development efforts. Through Commercial Real Estate Secrets, she interviews leading investors, brokers, developers, and industry experts to provide actionable insights on commercial real estate investing, brokerage, leasing, development, and market trends.
Facing a Loan Maturity or Considering Selling Your Industrial Property?
When commercial real estate financing becomes challenging, understanding your property’s market value and available options is an important part of deciding what comes next.
Whether you’re approaching a loan maturity, considering selling an industrial asset, or evaluating acquisition opportunities involving properties with financial challenges, The Warehouse Hotline can help you navigate the industrial real estate market in Colorado.
Our team specializes in industrial property sales, acquisitions, investment transactions, and property valuations throughout Denver and the surrounding Colorado markets.
If you’re evaluating whether to sell an industrial building before refinancing, our team can help assess potential buyer demand, comparable transactions, and the property’s competitive position.
For investors interested in acquiring industrial real estate, we help identify opportunities involving warehouses, distribution facilities, flex properties, industrial land, and other industrial assets that align with their investment objectives.
Whether you’re considering selling an industrial property, evaluating its current market value, or searching for your next investment opportunity, we’re here to help you understand your options.
