On Thursday, July 15, 2010, over 100 professionals gathered for a ULI Charlotte symposium discussing realities in the real estate market. The presenters, Rick Rayburn of Rayburn, Cooper & Durham, PA, David Jones of K&L Gates, and Henry Lomax, Jr. of Crescent Resources, LLC,  provided their views. Below are some of the lessons learned from the event:

• Understand the forgiveness of debt is a taxable event and upon a borrower’s restructuring of its debt, it might have  a tax liability. You should be sure to understand tax consequences of any loan restructuring that you do prior to such restructuring.
• Vulture capital funds seem to be moving to buy some real estate; especially lot inventory at very deep discounts (e.g. 20 cents on the dollar). There are some noted sales in the market but it is difficult to figure out who is to call the lenders to find the opportunities. It may be easier to buy property post-foreclosure (out of the lender’s Real Estate Owned assets group).
• It seems that many banks are going back to relationship lending; knowing the developer and understanding the developer’s new business plan.
• Real estate developers are frequently structured as a single asset limited liability company with various members. The members are responsible for the taxes of the limited liability company. If there are foreign members (located outside of North Carolina), NC will collect all the taxes from the managing member and in turn will be forced to get reimbursment from its out of state members.
• There’s not a significant amount of regulatory pressure on banks in regard to specific loans. However, regulators look at the type of loans that are not generating debt service and might pressure lenders regarding their quantity of underperforming loans. It appears sometimes it is more important for lenders to get underperforming loans off their books even if it doesn’t raise as much money as it would holding the loans on the books for a longer period of time before disposing of them.