Loan Asset Management During Covid
I'm trying to get a better sense of what asset managers of real estate debt do on a daily basis (for example at a LifeCo or debt fund). My understanding is that outside of a crisis, it's typically monthly/quarterly reporting and signing off on major leases or big changes. Wondering if that's accurate, and what their responsibilities look like now that shit has hit the fan. Thanks!
[{"id": "frq8yno", "text": "I work on construction loans. I go through change orders, make sure that they are compliant with loan docs (teaching milestone dates, contingency, reserve rebalancing etc). Pretty much any time a borrower needs money we have to get and make sure we are giving them the money for the right things, and the project isn\u2019t getting out of hands. As well as make sure all the loan doc requirements are met.", "replies": [{"id": "frqe90h", "text": "Please don\u2019t take this the wrong way, but does that fill up a full work week for you?", "replies": [{"id": "frqqqgp", "text": "It actually does- if you have enough loans to do this for, it adds up.", "replies": [], "depth": 3}], "depth": 2}, {"id": "frsew9y", "text": "Nice, thanks for spelling this out.", "replies": [], "depth": 2}], "depth": 1}, {"id": "frqgz51", "text": "You\u2019re partially correct. There\u2019s a lot of reporting on loan progress and risk rating and approval of leases with associated TI/LCs, or memo on why they are more (as is often the case). There\u2019s covenant reporting, guarantor reprinting and annual spreading. For construction and value add loans, there\u2019s monthly budget and draws, and interest reserve analysis. Lots of reporting. That\u2019s basically the job", "replies": [{"id": "frseq59", "text": "Thanks for elaborating on this. After these reports go to credit committee, does anything get changed in the investment? For example if TIs go 20% over projections does management go \"ah shit, don't do that again\" or is there a more active response?", "replies": [{"id": "frsl6fn", "text": "Yes, stuff changes all the time. That\u2019s basically why the role exists. In some shops, the originator is also the underwriter and asset manager. In others, the asset manager is a distinct position separate from the original structuring. In either case, thing usually don\u2019t go according to plan. Maybe lease-up is slower than expected, so the borrower is going to fail a covenant and needs to modify the loan. Maybe the TIs are more than expected and the reserve for leasing is not sufficient and then the borrower may have to plan to put additional funds into the project. Those are just two examples. The point is, things change all the time. There\u2019s a lot of modification memos and loan mods, especially in today\u2019s environment.\n\nHope that helps.", "replies": [{"id": "frt18re", "text": "Nice, this is super informative. Thank you man", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "frrs5zq", "text": "If the projects go to shit then you are doing a variety of downside analysis.  You need to know what position you\u2019ll be in under a variety of scenarios.", "replies": [], "depth": 1}]