In a previous post I talked about the challenges I was having with Key Bank in getting an assumption approved so we could sell a portfolio property. My dealings with Key improved briefly, and then they got much worse.
Let me explain.
My original frustration was that they were moving so slowly. On 8/15/07, the day after my last post about this matter, I started calling around to see if I could get an ally within Key Bank to exert some pressure. To my pleasant surprise that same day I received a call from the head of the Transactions Group in Dallas before any of my acquaintances within Key had a chance to call or email them. It turns out that the management is competent and had, on their own, realized that my file was languishing and reached out to me to assure me that they were prioritizing it. They told me that it would soon be passed from their hands into the hands of the Special Servicer. In fact, they said it should all be written up and passed along by Monday, August 20th.
So far so good. I had a smile on my face. I couldn't believe my good fortune.
But then things took a turn for the worse. On Monday the 20th both the Buyer and I get a last minute request for some additional information. I was perturbed because it was information that they could have requested weeks ago if only they had reviewed the file more carefully at some point in the first 14, 21, or even 30 days.
Now today, a week later, our underwriter calls the Buyer to tell him she is not inclined to approve the assumption. I'm blown away. Her reason is that the Buyer doesn't have the experience needed to make her comfortable with him doing his own property management.
Did I mention that they have had the Buyer's resume and a description of his professional experience for about two months now? How is it that they are just now concluding that the Buyer is not sufficiently qualified to operate a small commercial property?
What does an unqualified buyer look like you might ask. In this case our unqualified buyer is in his late fifties or early sixties. He has been a real estate investor most of his career. He has made most of his money in single family homes, and although not commercial property, he has had the organizational ability and professional savvy to buy and sell hundreds of homes and most recently maintained a portfolio of 42 homes in two states, CA and TX. He mastered the landlord/tenant laws in two states sufficiently to stay out of trouble with his tenants and keep his properties rented. He has fee managed other peoples SFR investment properties. He has amassed enough personal wealth that he would qualify as an accredited investor. He is also a real estate broker in California and Texas. He manages a staff of several employees while running his own brokerage and investment business.
Not only that, but should the deal close, he will have nearly five times the cash equity in the deal than our current partnership.
If I were the lender I would be rejoicing. Key Bank has a performing loan on a property that has gone up in value improving their LTV position. Rents have been substantially increased so the property's DSCR is much higher now than when they underwrote it. And they have a person of substantial means and good credit who wants to step in and replace our paper gains with his own real cash equity in the deal.
I just don't get it. I pray that reason will prevail.
If you're reading this and think I'm missing something, please email me or comment and let me know. I'll take all the help I can get.