Rob Verrone and Christopher Herron
Principal; Managing Director at Iron Hound Management Company
Of all the heavy hitters on this list, one firm really had its work cut out for it at the beginning of COVID.
Of Iron Hound’s $4 billion in transactions during the pandemic, $2.93 billion involved debt restructuring (and the remainder was new debt placement).
To put this in context, in 2018, the firm’s business was split 50/50 between the two business lines. In the dizzying market heights of 2019, debt and equity deals were firmly leading the charge — and then COVID hit.
The team was smacked with 50-plus restructuring assignments almost immediately as the virus shuttered U.S. real estate (and life as we knew it). Given Iron Hound’s significant expertise in the distressed arena, it isn’t surprising that it was many borrower’s first call.
“From the end of March through August, the restructuring business came back to life overnight,” Herron said. “We spent the first 90 to 120 days sifting through all of the inbound phone calls; people that were existing clients, people that we were talking to for the first time. A lot of people just needed to be educated on what was going on. The reality is, it was a learning period for a lot of borrowers who were not completely versed in how their loan structures work, specifically in CMBS.”
Fielding a barrage of requests for help, Iron Hound turned its focus to the deals the team felt needed a serious workout, stat. “I compare it to checking into the hospital versus stopping by the emergency room,” Herron said.
Notable New York transactions closed included the $160 million restructuring of the Royalton Hotel, the $120 million restructuring of 600 Broadway, and the $100 million restructuring of 660 Madison Avenue.
The team also arranged more than 20 new debt deals over the past year, including a $386 million construction loan for Clipper Equity’s 77 Commercial Street in Greenpoint, Brooklyn; and a $75 million predevelopment loan for former WeWork CEO Adam Neumann and Jeffrey Dagowitz’s Chelsea development site at 123 West 23rd Street.
Herron describes their assignments as a “tale of two cities,” as 2020 drew to a close. “We had a lot of retail, hospitality and some office assets in various stages of discussions with special servicers, with what I would consider to be significant problems. But, at the same time, we had a healthy pipeline of CMBS; balance sheet; debt fund; or some higher-yielding, higher-octane players for new deals via acquisitions or refinance. So, on the new lending side, there was a home for every type of transaction.”
While it feels like COVID could almost be behind us, Herron said that the problems the crisis exposed in the office sector have yet to be truly felt. “We’ll continue to see some of those larger office and suburban office assets trickling in over the course of the next few months.”—C.C.
