Behind Distressed Real Estate: What Happens When the Numbers Stop Working | Podcast

Location Cubed

Behind many distressed properties are decisions made under pressure, where leverage shifts quickly and missteps could erase value overnight. In this episode of Weaver: Beyond the Numbers, Location Cubed, hosts Howard Altschuler and Aaron Grisz sit down with Harold Bordwin of Keen-Summit Capital Partners. Together, they explore property dispositions, lease restructurings and the economic pressures shaping the real estate market in 2026.

Key Points:

• Outside of bankruptcy, tenants can leverage the threat of default to negotiate rent concessions, while Chapter 11 provides a powerful mechanism to reject leases entirely, often resulting in capped claims and limited recoveries for landlords.
• In default scenarios, a court-appointed receiver acts as a neutral fiduciary to preserve an asset’s value, preventing the mismanagement or physical deterioration that can occur when a borrower is in financial distress.
• As low-interest debt matures, many property owners face a refinancing cliff, where declining property values and higher interest rates make it nearly impossible to replace existing debt without significant capital infusions.

Harold explains that Keen-Summit operates at the intersection of process and property, focusing on workouts and restructurings across North America regardless of asset class. He highlights that while institutions are more accustomed to managing vacancies, smaller owners often rely on rent for retirement income, which complicates negotiations. Whether handling casual dining chains like Red Lobster or high-tech R&D parks, Harold emphasizes that successful restructuring requires a realistic economic assessment from both parties to avoid the total wipeout often seen in bankruptcy proceedings.

Looking toward the near future, Harold offers a cautious perspective on interest rates and inflation, noting that the long-term treasury rates driving real estate lending may not fall even if the Fed cuts short-term rates. Discussing the current climate of over-leveraged properties, he notes, “What’s been happening in 2025, I think it’s going to continue, and I think market conditions are actually going to get worse … We’ve been seeing borrowers who are over-leveraged in light of the fact that property values have come down and interest rates have gone up.”

The conversation also addresses the practical realities of fiduciary services and asset management in distressed situations, emphasizing the importance of preserving asset value, maintaining operational continuity and managing transitions with both discipline and judgment.

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