Strafford Webinar: Planning for the Rescue Capital Wave of 2023: Tax and Non-Tax Considerations for Rescue Capital Transactions

Pillsbury partner Andy Weiner and counsel Josh Becker will present during this upcoming Strafford webinar.

Event Contact
Meredith Kintner

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Heading into 2023, it is clear that inflation, interest rates, decreased valuations, and geopolitical unrest, together with the uncertain future of major asset classes (particularly office and retail), will lead to a wave of distressed real estate transactions. This may result in a familiar pattern of workouts, bankruptcies and foreclosures relating to existing indebtedness. However, there is a less familiar trend emerging, one that harkens back to the stagflation era of the early 1980’s: rescue capital transactions.

Many real estate ventures with positive cash flows will find the need for recapitalization due to the current market environment where refinancing is unavailable, debt maturity may be approaching, and current valuations make dispositions unattractive and impracticable. At the same time, private equity firms and other alternative sources of capital, including family offices, have an unprecedented amount of “dry powder” in their reserves, and an interest in filling the gap.

These developments are generating great interest, both by existing owners and potential investors, in so-called “rescue capital” real estate transactions. Rescue capital real estate transactions, often structured as a hybrid between equity and debt, may present a number of important tax and non-tax considerations for both existing real estate investors and the investment sources looking to opportunistically provide such rescue capital.

Listen as Andy Weiner and Josh Becker discuss key tax and non-tax considerations for rescue capital real estate transactions and provides planning techniques and considerations for parties engaged in such transactions.

The panel will discuss these and other key issues:

Many real estate investment vehicles are suffering from an “equity gap” in their capital structure due to inflation, higher interest rates, economic uncertainties and changing real estate usage.
As a result, many properties with solid fundamentals are no longer financeable without an infusion of equity or equity-flavored debt. Lenders are much less willing to “extend and pretend” and many existing owners do not want to sell based on current valuations but will accept a “squeeze-down” to survive.
“Rescue capital” is aggregating to provide the missing capital, but these transactions will require an understanding of complex “dirt,” tax, finance and insolvency issues.