Alert 01.09.23
Planning for the Rescue Capital Wave of 2023
Parties engaging in rescue capital transactions should prepare to meet the recapitalization demands of real estate entities.
Service
Pillsbury’s Rescue Capital Task Force is a multidisciplinary team of practitioners who have joined forces to represent clients in recapitalizing real-estate-owning entities that are challenged by the new environment of inflation, rising interest rates, declining cap rates, tightened underwriting criteria, environmental and sector repositioning, and changing patterns of space use. Bringing together attorneys from the Real Estate, Tax, Restructuring, Private Equity, Corporate, Family Office, Finance and Litigation practices, the Task Force represents companies in need of funds as well as potential investors, including the over $2 billion of dry powder recently committed to these projects. The Task Force is representing clients comprising all sides to these transactions, as well as lenders whose borrowers are proposing to restructure.
Pillsbury brings together seasoned counsel, each with several decades of experience in investment structures generally and the special structures and approaches (equity-flavored debt, debt-flavored equity, conversion rights, “hope notes,” and the tax risks and advantages of recapitalization) that are re-emerging. The Task Force is closely aligned with the Firm’s Distressed Real Estate Task Force, particularly in negotiating with or representing portfolio and CMBS lenders whose cooperation, as mortgage or mezzanine lenders, may be required.
The COVID and post-COVID periods constitute a sharp transition from a benign multiyear investment and lending environment to one that is fraught and uncertain. The Task Force combines Pillsbury’s multifaceted experience to support clients in their attempt to survive, on the one hand, or benefit, on the other, from this new reality.