Barnes & Co Insurance Services, Inc. ♦ 6440 Lusk Blvd., San Diego, CA 92121 ♦ CA Lic. OD60705


"Because Stuff Happens"


 

Barnes & Co

       "Insuring Your Business Success"


"Because Stuff Happens"


Ms. Barnes gave her "all" to assist us in finding a policy for our complicated business that would be affordable, solid coverage.  She showed us that she not only knows her business, but she loves it!!  We will definately renew with Barnes & Co

-- C. Dalton


Barnes & Co was founded in 2000 as a boutique Risk Management Company, with a commitment to foster relationships with business owners to procure the most comprehensive and cost effective insurance policy and risk management services available. In today's global economy, it is vital for an agent to combine business savvy, knowledge of the market, and compassion for the client to produce the most favorable result. At Barnes & Co, we are available to personally assist with all of our insured's questions and concerns.  When you are looking for the best of the best in Construction General Liability Coverage, Energy Insurance, Construction Wrap-Up Coverage, or Professional Liability Coverage for your business, Barnes & Co can deliver.


IRMI - Construction Risk Management - Don Neff article - Distressed Projects

For several years, the real estate development and construction industries have been reeling from an economic slowdown with reductions in property demand, significant standing inventory levels, and bank-initiated project foreclosures.  As a result, both the residential and commercial real estate roller coasters are racing toward the bottom of this economic cycle in declining property values and sales/leasing activity.  Lenders' balance sheets have ballooned with distressed and nonperforming assets.

Contractors and developers with patient capital and a long term investment mindset have an opportunity to take over some assets at bargain prices, but these transactions present some unique risks that must be addressed.  The following article will explore these risks, and the solutions for evaluating these opportunities.

The Problem

During the extended construction boom that spanned 1997 - 2007, homebuilders, commercial property developers and large public builders all relied on debt instruments (land secured, development and construction loans) to finance their operations.  The easy access to project financing was, in fact, the life-blood of the construction industry and the driver of its enormous growth.  For large public builders, project financing is arranged at the enterprise level through large, money center banks and facilitated by corporate lines of credit.  For smaller builders, regional community banks have provided the primary source of debt capital through specific project loans (assets on the banks' balance sheets).  In both arenas, lender balance sheets have swollen with thse assets, many of which are now distressed and non-performing.  As property values plummeted and credit markets dried up, many residential development projects were abandoned due to lack of funds.  Project sponsors without access to equity injections from outsiders (e.g., friends, family, institutional investors and off-shore soverign capital) were often unable to keep the project afloat.  The typical path of such ill-fated projects usually involves the bankruptcy of the project sponsor, lender foreclosure, and transfer of the property into the bank's "real estate owned" (REO) portfolio.

Barnes Blog

Let's discuss managing "Broken Construction" projects: