Receivership 2.0: Shifting Control
The New Currency in Today’s Distressed CRE Market
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October 24, 2025
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Rising distress in the commercial real estate (“CRE”) market is causing more property owners to default and go into special servicing. Today, the foreclosure threat is one that lenders increasingly prefer to avoid due to the immense resources, liability and reputation risks associated with taking back an asset into ownership and then having to liquidate it. Traditional paths (workouts, deed-in-lieu, foreclosure) can be slow or value-eroding when operations deteriorate or capital is constrained. Receivership can offer a court-supervised, operations-first path to stabilize performance, preserve value and create optionality — without forcing lenders into direct ownership.
For many assets, the near-term challenge isn’t finding a buyer at yesterday’s price — it’s stopping the operational bleed today. Receivership can restore discipline, protect cash flow and keep tenants, vendors and municipalities engaged, buying time to improve net operating income (NOI) and re-underwrite the business plan. It can also minimize the reputational and practical burdens that come with a lender “taking title,” while positioning the property for the best next step — restructure, refinance, sale or foreclosure completion.
A receiver is always court-appointed in the U.S. — never installed unilaterally by a lender — and, as an officer of the court, answers to the judge. Its mandate is to preserve and protect the property for all stakeholders, frequently aligning with but not beholden to the lender. Sale authority is court-specific: in most jurisdictions a receiver cannot sell real property without a specific order; typically, the receiver stabilizes the asset and may market it but cannot close without court authorization.
Benefits of Receivership: Creating Value for Stakeholders
Preserves Value
Receivership can stabilize operations and prevent borrower mismanagement by ensuring rents are collected, expenses paid and the property’s physical condition is maintained and secured, potentially avoiding deterioration, long-term property damage and liability that erode value.
Enhances Control and Transparency
The receiver provides the court, lender and stakeholders with independent, court-submitted reporting on income, expenses, rent rolls, vendor/tax status and capex needs. This visibility supports faster, data-driven decisions on workouts, restructurings, or sale strategies and reduces borrower-driven delay.
Avoids Ownership Liability, Limits Risk Exposure
By transferring control from the defaulting borrower to a court-appointed receiver (rather than taking control itself), the lender is largely insulated from day-to-day operational liabilities and reputational risks associated with direct property ownership. Receivership does not eliminate all risk: for example, environmental issues can still impair collateral value, and lender-liability/bad-faith claims can still be asserted. Court supervision protects the receiver’s court-authorized actions, not automatically the lender’s.
Creates a Platform for Restructuring
Subject to the appointment order and any necessary court approvals, the receiver can recalibrate staffing, renegotiate contracts, reset expense baselines and implement targeted leasing programs to lift NOI and occupancy, thereby boosting valuation and recoveries. The ability to modify or terminate leases or management contracts depends on court authorization and the order’s scope.
Facilitates Access to New Capital
With court oversight and transparent budgets, receivers typically have a network of rescue capital providers — often funds, preferred equity and other opportunistic investors — who are comfortable funding operations in distressed CRE assets under court supervision. Despite its higher cost, this capital supplies liquidity to keep tenants (funding TIs/LCs and protecting the lender), complete essential capex to stay competitive and bridge cash-flow gaps until the asset stabilizes.
Enables Strategic Repositioning for Maximizing Recovery, Exit, or Restructuring
Receivership buys time to validate the business plan, address deferred maintenance and clarify tenant posture — all of which may make the asset more marketable or better positioned for debt restructuring. When permitted, the receiver may market the asset and, with specific court authorization, facilitate a sale.
Faster Path to Resolution
Foreclosures can stretch for months (or longer) depending on jurisdiction and litigation posture. By contrast, receivership appointments in routine matters are often obtained within weeks (complex or contested cases can take longer), trimming delay and preserving momentum.
Selecting the Right Receiver
The right receiver should combine sector depth with court-tested execution:
- Sector experience. Direct track record in the asset class (multifamily, office, retail, hospitality, industrial, specialized).
- Distress and transition expertise. Demonstrated ability to stabilize operations, manage turnarounds and navigate stakeholder friction.
- Value-creation orientation. Clear playbooks for NOI lift, expense resets, tenant retention and capex triage.
- Case volume and outcomes. Prior court appointments, successful exits and strong references.
- Financial and operational competence. Accurate, timely reporting; banking controls; vendor/tax compliance; access to quality property management.
- Legal and fiduciary strength. Familiarity with local rules and customary orders; credibility with courts; ability to manage disputes and compliance matters.
A Tool for Positive Outcomes
Receivership is not a cure-all but when thoughtfully structured, it can help preserve operations, protect value and create options that maximize recoveries. While receivers act independently under court supervision, a well-structured receivership can align the interests of all stakeholders — lender, borrower and court — toward an efficient, value-maximizing outcome.
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Published
October 24, 2025
Key Contacts
Senior Managing Director, Co-Leader of Real Estate Restructuring Advisory