A large equity firm in Georgia was sued by a client after refinancing their real estate loans for a one percent fee. McGuffin Medical chose to refinance their multi-million portfolio with Fantsam Equity and agreed to enter into joint ventures with Fantsam, who hoped to recoup previous losses and pay back their bank creditors. Ultimately, the joint venture fund did not perform well, and Fantsam is being sued by both the McGuffins and one of their bank creditors. A real estate specialist was needed to assess whether the one percent financing fee was reasonable and consistent with the market, and if the joint venture efforts made by Fantsam on behalf of the McGuffins were reasonable.
Question(s) For Expert Witness
- 1. Please briefly describe your work facilitating commercial real estate loan workouts.
- 2. Please comment on whether the fees requested by Fantsam were consistent with the market and if the services rendered by Fantsam to the McGuffin family were appropriate.
Expert Witness Response E-046810
I have very extensive experience in commercial and residential real estate deals, having advised on both the lender and borrower side. At one point in my career, I managed workouts for the largest home builder in the US. I believe I can speak authoritatively about every aspect of this case; my initial opinion of this case is that a one percent transaction fee is not only reasonable, but it could have been a lot higher given the state of the market at the time.