SilverLeaf Opportunity

  • Leading up to the current US financial crisis commercial real estate investors used as much cheap debt as they could to develop, purchase or refinance properties. Many of those loans make their way into pools of mortgages behind commercial mortgage-backed securities (CMBS). Because of declining prices and a weakened economy, many borrowers find themselves in economic or maturity default.

  • There have been 349 Bank Failures from January 2008 through the 1st quarter of 2011. Because banks are carrying non-performing, under-performing or equity deficient loans they are under tremendous pressure from regulators to raise capital. Because of their reluctance to book losses, banks are often under quarterly reporting pressure.


Figure 1
Commercial and Multifamily
Mortgage Maturities Loans
Maturing by Year



Sources: Federal Reserve, Foresight Analytics

  • Many lenders, who are not experts in managing commercial real estate, find themselves facing the challenges of a control position, which further accelerates the selling of mortgages and depresses their price even further.

  • Prices are below the intrinsic value due to the economic downturn, excess leverage, stress selling and forced liquidations.

  • The outcome is that buying distressed debt is a great idea when it can be done at prices that are below the intrinsic value of the underlying collateral.

  • SilverLeaf identifies and applies a seasoned underwriting process to determine each purchase with the appropriate exit strategies.