Distressed Commercial Bridge Loan Trading &
Workout Advisory

The "Extend and Pretend" era of Commercial Real Estate (CRE) finance has officially closed. As the maturity wall hits the Multifamily and Office sectors, trillions in short-term bridge debt is coming due in an environment where borrowers cannot refinance.

For Private Debt Funds and Regional Banks, the choice is binary: Foreclose and assume the liability of Real Estate Owned (REO), or execute a Strategic Divestiture of the note. Fitzgerald Advisors facilitates the quiet, off-market trade of non-performing commercial bridge loans, allowing lenders to recover capital without triggering a public failure.

I. The Maturity Wall Analysis

The "Value-Add" bridge loans originated between 2020 and 2022 were underwritten on assumptions that no longer exist: 3% cap rates and 4% interest rates. Today, those projects are stalled. Rent growth has flattened, and floating-rate debt service has doubled.

II. The REO Trap: Why Foreclosure Fails

Many lenders default to foreclosure as a remedy. In the current cycle, this is a strategic error. Taking title to a stalled construction project or a half-vacant office building transforms a financial asset into an Operating Liability.

The Cost of Ownership:

• Insurance Spikes: Insurance premiums on distressed assets have tripled in Florida, Texas, and California.
• Receiver Fees: Court-appointed receivers drain cash flow during the litigation phase.
• Cap Rate Decompression: The longer you hold the asset, the more the valuation may erode as comparable sales drop.

III. Valuation of Distressed CRE Debt

We do not price commercial paper based on the Unpaid Principal Balance (UPB). We price based on the As-Is Value of the Collateral minus the Cost to Complete/Stabilize.

Our valuation matrix analyzes the Capital Stack priority:

• Senior Secured (First Lien): Highest recovery rate. We target buyers looking for "Loan-to-Own" strategies.
• Mezzanine Debt: High risk. We market these positions to aggressive yield-seeking funds capable of curing the senior lien.
• Preferred Equity: Often wiped out, but tradable as "Control Positions" to specialized developers.

IV. CRE Loan Workout & Divestiture Protocol

We execute Private Treaty Sales. We do not list commercial notes on public boards like CoStar or LoopNet. Public listings signal distress to the borrower and the market, collapsing the asset's value.

Our Process:

1. Forensic File Audit: We review the Note, Mortgage, Guaranty, and Intercreditor Agreements.
2. Quiet Marketing: We present the "Teaser" to a closed loop of 50 vetted Institutional Buyers (Private Equity, Family Offices, Special Situations Funds).
3. Settlement: Funds are wired, and the Assignment of Mortgage is recorded. You exit the position cleanly.