Structured Success: A Baltimore Mixed-Use Case Study

Foundation Real Estate Advisors (FREA)

FREA is a stand-alone, sidecar advisory firm for Foundation Specialty Finance.  FREA is led by John Seeburger and Chris Crovatto, industry veterans with over 35 years of experience in commercial real estate finance and direct ownership.  The Company provides specialized consulting and advisory services to Foundation, focusing on special situations where our Borrowers need boots-on-the-ground, structured finance solutions across commercial, multifamily, and single-family investment properties.  John and Chris are also Co-Founders of Foundation.

Following is a brief case study of our collective loss mitigation efforts on this loan:

Recent Foundation / FREA Success: Baltimore, MD / Mixed-Use financing.  A recent transaction demonstrates our creative problem-solving approach and collaboration with a local Sponsor.

Challenge:

Foundation assigned to asset manage this asset in March and subsequently completed the foreclosure and contacted the Sponsor (family member of existing tenant) post-sale during the ratification process.

• Loan was defaulted due to renovation delays and valuation issues.
• Fire damage affected seven of nine residential units.
• Ground floor retail remained operational.

Solution:

Through direct engagement with the ground floor tenant, FREA identified and negotiated a sale of the building to the restaurant owners and Sponsor, significantly above our estimated "As-Is" market value.  The team structured a creative financing solution including:

• Seller financing from existing Lender to expedite closing
• Renovation cost escrowed with Lender
• Ability for Borrower to partially pay down the loan over time to further reduce NB exposure
• Incentive for Borrower to repay the loan within nine months (waiver of 1% exit fee)

Outcome:

• The transaction closed in Q/4/2024 and will yield well above initial recovery forecasts, with plans to sell the performing loan (once renovations are completed).