The TreppWire Podcast: A Commercial Real Estate Show

Episode 351: "CMBS Loan Workouts Unfiltered with Shlomo Chopp"

Date: September 9, 2025
Guest: Shlomo Chopp, Managing Partner, Case Equity Partners
Hosts: Hayley Keen, Lonnie Hendry

Overview

This episode offers an “unfiltered” look at commercial real estate (CRE) loan workouts, focusing on the unique challenges and strategies of working through distressed debt in the CMBS (Commercial Mortgage-Backed Securities) market. The guest, Shlomo Chopp, is lauded for his deep and practical expertise in tackling complex real estate problems, particularly regarding value-add opportunities and distressed assets. The conversation covers key themes such as the realities of CMBS workouts, the importance of early, strategic engagement, the limitations of appraisals in distressed situations, and predictions for the evolving CRE distress cycle.

Key Discussion Points & Insights

1. Shlomo’s Background and Approach (Starts at: 00:38)

• Necessity Breeds Expertise: Shlomo entered distressed workouts post-2010 out of necessity, teaching himself CMBS intricacies and building a career helping borrowers in distress.
• Blunt, Direct Communication: Shlomo attributes his success in the field to his straightforward, no-fluff approach—essential in high-stakes negotiations.
• Data-Driven Decisions: He emphasizes leveraging good data for informing both clients and lenders, partnering with Trepp for analytics.

Notable Quote:

“Necessity is the mother of invention, right?...I convinced myself I’m the best.”
— Shlomo Chopp (02:07)

2. Social Media, White Papers, and Industry Education (05:25)

• Value Proposition Online: Shlomo uses LinkedIn to build relationships and share knowledge, not just promote deals.
• White Paper Strategy: Instead of vague “lectures,” Shlomo published a transparent, step-by-step approach to CMBS loan workouts, receiving strong industry response.
• The Formula Myth: He dispels the myth that workouts are solely relationship-driven, explaining there are systematic approaches to “unlock” lender cooperation.

Notable Quote:

“The biggest misunderstood factor in CMBS was that there’s actually a formula for CMBS lenders that they follow to work out a loan. The question is, can you capitalize on that formula?”
— Shlomo Chopp (05:25)

3. Loan Workout 101: Definition and Process (10:40)

• Re-underwriting in Reverse: A loan workout re-underwrites distressed assets from the lender’s risk perspective, often requiring new capital or borrower concessions.
• Pitching Value: The core challenge is persuading the lender that the existing borrower is the solution, not the problem—usually demonstrated by commitment (capital injection).
• Comprehensive Management: Shlomo’s unique value is end-to-end strategic guidance—from document review to legal risk management and operational restructuring.

Notable Quote:

“A loan workout is basically a re-underwriting of the asset in the reverse manner, saying, listen...here’s why I as the borrower am the solution and not the problem.”
— Shlomo Chopp (10:40)

4. Early Action and Negotiation Mistakes (15:44)

• Start Early: Delays reduce leverage—early engagement is critical.
• Negotiation Opportunities: Both unsophisticated and sophisticated borrowers often wrongly assume there’s no room for negotiation.
• Preparation is Key: Too many borrowers (both large and small) fail to prepare or attempt to bargain, losing opportunities to resolve distressed assets favorably.

Notable Quote:

"You need to start early. When you see there’s going to be a problem or likely to be a problem...you likely should look at a contingency.”
— Shlomo Chopp (19:34)

5. Complexity as Opportunity (20:28)

• CMBS vs. Bank Loans: Shlomo asserts CMBS loan workouts, while perceived as impersonal, are often more logical and predictable than bank workouts.
• Leverage in Complexity: The more structurally complex a deal, the more levers and solutions become available.

Notable Quote:

“It’s easier to work out a CMBS loan than to work out a bank loan...CMBS, it’s a specific set of rules and guidelines as to what it takes to work it out. If you could work within those guidelines, you’re good to go.”
— Shlomo Chopp (20:28)

6. Valuation Challenges and Process (25:30)

• Hands-On Asset Management: Shlomo’s team often becomes deeply involved at the asset management level, not just financial engineering.
• Establishing Value: Determining value demands deep market engagement, understanding both borrower and lender perspectives, and reconciling disparate valuations through negotiation.

Notable Quote:

“Value is a very finicky thing...you have dueling appraisers, almost like dueling violins...but the way you do it is you learn the property as the lender will learn the property.”
— Shlomo Chopp (25:30)

7. Where Are We in the CRE Cycle? (30:12)

• Busy With Distress: Shlomo is busier than ever—not necessarily because it’s “worse” but because more market players now realize they must act.
• Two Narratives Coexist: Origination volumes are up, but office distress remains critical; class A properties see activity, but most risk resides in B/C assets.
• Prediction: The next 12 months will see a “flurry of distressed deals.” Kicking the can will end, especially as even lower rates won’t resolve occupancy/cash flow issues.

Notable Quote:

“My prediction right now is as follows: I think over the next year we’re going to see a flurry of distressed deals because kicking the can is not going to work anymore.”
— Shlomo Chopp (34:55)

8. Appraisal Frustrations and Market Dysfunction (38:43)

• Flawed Valuations: Shlomo criticizes appraisals for ignoring real risk (e.g., lease-up assumptions that ignore reality), calling out both underpayment for appraisers and conflicts of interest.
• Market Impact: Inaccurate appraisals distort bond trading, mislead stakeholders, and contribute to CRE booms and busts.
• Call for Change: Both Shlomo and hosts agree that more transparent, data-driven, and objective valuation methods are needed.

Notable Quote:

“You cannot give me a pro forma and then call it an appraisal...when you play at the edges and you’re supposed to be an authority and you don’t call balls and strikes, you’re indirectly causing someone to either make money or lose money. And that’s manipulating markets.”
— Shlomo Chopp (40:05)

9. Concluding Thoughts and Contact Details (44:29)

• Passion for Problem-Solving: Shlomo’s infectious enthusiasm for the “game” of loan workouts comes through, with a genuine desire to help.
• Available for Engagement: He encourages listeners to reach out on LinkedIn or X for advice or discourse.

Notable Quote:

“I love what I do. It’s so much fun and I’m always grateful for you guys.”
— Shlomo Chopp (44:29)

Notable Quotes (with Timestamps & Attribution)

• “Necessity is the mother of invention, right?...I convinced myself I’m the best.”
  (Shlomo Chopp, 02:07)

• “The biggest misunderstood factor in CMBS was that there’s actually a formula for CMBS lenders that they follow to work out a loan. The question is, can you capitalize on that formula?”
  (Shlomo Chopp, 05:25)

• “A loan workout is basically a re-underwriting of the asset in the reverse manner, saying, listen...here’s why I as the borrower am the solution and not the problem.”
  (Shlomo Chopp, 10:40)

• “You need to start early. When you see there’s going to be a problem...you likely should look at a contingency.”
  (Shlomo Chopp, 19:34)

• “It’s easier to work out a CMBS loan than to work out a bank loan...If you could work within those guidelines, you’re good to go.”
  (Shlomo Chopp, 20:28)

• “Value is a very finicky thing...you have dueling appraisers, almost like dueling violins.”
  (Shlomo Chopp, 25:30)

• “My prediction right now is as follows: I think over the next year we’re going to see a flurry of distressed deals because kicking the can is not going to work anymore.”
  (Shlomo Chopp, 34:55)

• “You cannot give me a pro forma and then call it an appraisal...That’s manipulating markets.”
  (Shlomo Chopp, 40:05)

Timestamps for Important Segments

| Segment | Timestamp | |---------------------------------------------------------|-----------------| | Shlomo’s background and philosophy | 00:38–04:00 | | Social media/white paper strategy & CMBS formula | 05:25–09:28 | | Loan Workout 101—definition and practice | 10:40–15:03 | | Early action and negotiation errors | 15:44–19:56 | | Complexity as leverage in workouts | 20:28–24:30 | | Establishing asset value in uncertain times | 25:30–30:12 | | Current distress cycle analysis & predictions | 30:12–35:46 | | Appraisal system critique | 38:43–43:08 | | Final thoughts & how to contact Shlomo | 44:29–44:43 |

Memorable Moments

• Shlomo's football analogies for loan workouts—“It’s not a Hail Mary or an end-around, it’s blocking and tackling.” (05:25)
• Blunt advice to borrowers: “Start early. Hoping for the Fed or a bankrupt tenant isn’t a business plan.” (19:34)
• Candid humor about appraisal: “If you continue going to the game and you’re a Mets fan, then you deserve what you get.” (41:12)
• Open challenge for help: “If you have a challenge, drop me a note...I’ll show you how you solve the problem.” (20:28)

Tone and Takeaway

• The discussion is direct, unscripted, and pragmatic, befitting the high-stakes world of commercial real estate workouts.
• Shlomo’s expertise is both technical (deep on structured finance) and operational (asset management, negotiation).
• The industry’s need for transparency, proactive engagement, and better tools (both data and process-driven) resonate throughout.
• The CRE distress cycle is not abating—borrowers and lenders must get smarter and more creative to survive and thrive.

Contact for Followup: Shlomo Chopp can be reached via LinkedIn and X (@ShlomoChopp)

Upcoming Event Mentioned: CREI Summit, Palm Desert, September