More Commercial Real Estate Owners See Value in Special Servicing Platforms

The Commercial Observer discusses how major property owners are launching or acquiring special servicing platforms, businesses that manage and restructure troubled commercial mortgage-backed securities (CMBS) loans when borrowers default. While advocates argue that owners bring valuable real estate expertise to workouts, critics raise concerns about potential conflicts of interest.

Neil Shapiro, partner in the real estate practice at Herrick, said while there were some concerns about conflicts of interests in CMBS workouts with more special servicers affiliated with CRE owners, no noticeable problems have resulted. 

"The opportunity is there and the perception is there for conflict, but I have not seen any evidence of a transaction that resulted in lower proceeds for the bondholder because an affiliate picked it up," Neil said. "There’s a lot of positive impacts with companies that have real estate development expertise being able to use that to help on a real estate workout."

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