Throughout most of the topics that I have written about over the years there has been a central and consistent theme: Borrowers should consider their lenders as stakeholders—as long as the debt is outstanding—and frequently communicate with those lenders, particularly when times get rough.
I firmly believe that the best way to resolve difficult times is to throw all of the cards out onto the table, hiding nothing and holding nothing back, and then to ask those with funds at risk to cooperate in a solution. And I carefully use the term “stakeholders” for the lenders, rather than “partners,” since the lenders do not share in the upside of a transaction as partners and owners do.
For better or for worse, lenders who have been around for a few economic cycles have more experience with rough times than most borrowers and can share lessons learned from multiple transactions. Over my roughly 15 years as a workout banker in Dallas and Baton Rouge and during some fairly bleak times and in my private practice since I escaped banking, I can personally attest that the best outcomes result from open communication and cooperation. And patience. On all sides. Even with regard to appraisers who test our patience (yes, I fit it in one more time). So best wishes for success as we approach the end of the year and hope for cooperative solutions if and when our best efforts fall short.
Brian Andrews is assistant director of the Real Estate Research Institute at LSU’s E.J. Ourso College of Business. His private practice is Andrews Commercial Real Estate Services, and he can be reached at brian.andrews@acresllc.com.
Editor’s note: Columnist Tom Cook is off this week.
