Los Angeles, CA real estate attorney Steven Morris talks about what his firm can offer real estate developers who have troubled projects. He explains that he assists real estate developers with troubled projects by providing guidance on loan workouts and other resolutions for projects that have gone underwater. Lately, particularly in the hospitality sector, many hotel developments and similar projects have suffered significant decreases in value, sometimes leaving the project worth less than the loans secured against it. This situation is problematic not only for the developer but also for the lender, who typically does not want to take over a hotel and risks losing money if forced to sell at a distressed price.

His approach fosters cooperation between the hotel developer and the lender to maximize the value of the project. Typically, this involves allowing the hotel developer to remain in a management role, as they are best suited to run the property, while also structuring agreements that let the developer maintain an ownership interest in the building, the project, and its development. At the same time, the arrangement aims to maximize the potential return for the lender.

Ultimately, the lender receives the best possible return given the circumstances, and the developer retains a stake in the project, continues generating revenue, and remains in control of management. This approach preserves value for all parties, avoiding costly conflicts that would diminish the project’s overall worth.