AGG Partners Abe J. Schear and Steven A. Pepper were quoted in an article titled, “The Legal Perspective on Distressed Properties,” which ran in the March edition of Shopping Center Business. The article describes the various situations in which attorneys are representing commercial real estate owners and retailers in the middle of distressed situations. Mr. Schear comments that some owners are distressed simply because they don’t have enough capital to make payments on properties that are struggling with cash flow. He goes on to discuss the pros and cons of rent relief versus deferrals and lease restructuring techniques. If an owner defaults on its loan, a retail center is generally placed in special servicing by the lender, many of whom are choosing not to foreclose as they can’t afford to hold the real estate in arrears. In these cases, attorneys are asked to do loan workouts on properties. Mr. Pepper says he’s been asked to do an increasing number of receiverships, which shield the lender from being the owner and keeps the borrower on the hook for the mortgage, taxes and insurance premiums. Mr. Pepper particularly sees this trend in the permanent loan market where commercial mortgage-backed securities (CMBS) lenders don’t want to own the asset, but equally don’t want the borrower or its manager running it.