While visiting clients in New York City, we noticed the beginning of a trend. Several of the large borrowers have been able to extend the due date deadlines for their Hawaii commercial real estate loans. We noted that the terms for these loans were exceptional, with very low interest rates. The lenders, rather than foreclose or take the Hawaii property back at this point, have agreed to extend the low interest rates in hopes that the situation gets better. Taking back a property in today’s environment is an expensive and time-consuming business. This allows these owners to continue being able to keep their mortgages current and retain the low interest rates that were achieved three and four years ago. In most cases, the properties are still throwing off positive cash flow to the borrowers.
Hawaii Commercial Real Estate Loans
We noted that these borrowers, being in New York City, and being actively involved in the financial markets, seemed to have better access to the different tranches or levels of lenders within each of the loans.
Many Hawaii borrowers have tried to communicate and work with the different tranches of lenders without much success. The larger borrowers in the money city centers seem to be having better results at negotiating first the riskiest pieces of the loans, and then second the main body or first position of the loan to achieve these extensions.