Given the deterioration in the RE market Bruce Sturman says ,RE funds are seeking to buy NPL's

Dec. 28, 2010 - PRLog -- --
Given the deterioration in the commercial real estate market, it has become apparent to many sophisticated real estate investors that the acquisition of non-performing mortgage debt securing real estate assets may offer a more attractive investment opportunity than the direct acquisition of real estate or equity interests (and, in many cases, it may be the only means available to acquire the real estate).

As is the case with any purchaser of real estate assets, the purchaser of non-performing mortgage debt will need to assess the property related fundamentals of the real estate and related risks as part of its underwriting, such as local market conditions, leasing status, property and environmental conditions, and title and zoning. (In the context of acquiring non-performing debt, it should be noted that an accurate and complete due diligence review of many of these property related fundamentals, and certainly desired representations and estoppels with respect to these fundamentals, may not be obtainable since the borrower’s cooperation will not be present). However, in the context of purchasing non-performing mortgage debt, the additional need to assess the quality of the mortgage lien itself is very often under appreciated in connection with underwriting the investment opportunity.