Only Time Will Tell....

Last week, General Growth Properties ("GGP"), the second largest U.S. mall
owner, filed for bankruptcy. Laden with too much corporate and property
debt, they could not longer fend off their creditors. Interestingly, it
was their smaller, in terms of dollars, creditors at the property level
that applied the most pressure. Now the bankruptcy court will have to
sort out the mess and most likely GGP will have to sell under-performing
properties at distressed prices. This will be a more straight forward
task than what happened at the end of 2008 when another large real
estate sponsor went bankrupt.

When DBSI file bankruptcy at the end of last year, they left many
investors twisting in the wind, particularly those who owned assets that
were underperforming. Because of the Tenant in Common structure of the
DBSI ownership entities, and the master leases that were dissolved, the
eventual outcome for the investors is much more muddled than GGP
shareholders (who will retain their passive investor roles). DBSI Tenant
in Common owners, on the other hand, now have to give up their passive
roles and operate real estate assets, most without the benefit of
previous commercial real estate experience.

We have been receiving many calls from frustrated Tenant in Common owners (as well as their lenders)
to lend a hand to the process and in some cases we will see a way to
provide a liquidity event that can resolve a difficult situation. Only
time will tell how many of these properties can be saved.