In episode 77 of Real Talk with Andrew Kirsh, Michael Cohen, Managing Director of Brighton Capital Advisors, shared his perspective on the state of CMBS lending and the challenges borrowers face in today’s market. With more than three decades of experience in CMBS origination, servicing, and advisory roles, Cohen, a pioneer in the CMBS Industry, provided actionable insights into how borrowers can protect themselves in a rapidly shifting environment.
“The system was never built to handle this volume of [loan modification] changes. Waiting until the last minute almost guarantees unnecessary fees and fewer options.”
– Michael Cohen, Brighton Capital Advisors
Highlights from the Video
“What does Brighton Capital Advisors do?”
“How can Brighton Capital Advisors best help clients?”
“So, when should I call BCA?”
“Should I just go into default?”
The Rise of Aggressive CMBS Lending Practices
For much of the past five years, lenders often extended maturities or modified loans rather than enforcing remedies. That approach shifted in early 2025 dramatically after the announcements of Tarrifs. Cohen explained that lenders and servicers have become far more aggressive, often revisiting defaults missed by the Lender or pressing for additional cash collateral as a condition of Lender approvals.
This trend has ALSO created new risks for borrowers who once assumed that non-recourse meant personal immunity from the Lenders reach. Carve-outs and guarantees are being interpreted more aggressively than before. Cohen summarized the trend simply: “Borrowers who try to go it alone (with the Special Servicers) are really running into a wall because they have no power”.
Why Early Action Is Critical for Borrowers
In this environment, waiting for the Lender to get back to you with a plan is no longer optional. Cohen stressed that borrowers should begin preparing six to nine months before a maturity date or expected issue with the property. The CMBS Master and Special system is slow, highly documented, and not built for high volumes or change. Waiting until the last minute almost always leads to additional fees and limits options for the borrower.
“The system was never built to handle this volume of [loan modification] changes,” Cohen noted. “Waiting until the last minute almost guarantees unnecessary fees and fewer options”. Borrowers starting discussions early with the Lender, allows the Master Servicer time to socialize a modification complete plan across to Special servicers and other Bond stakeholders, increasing the odds of a constructive response.
Common Borrower Mistakes in CMBS Workouts
Cohen outlined several missteps that weaken borrower positions:
- Calling servicers informally instead of submitting full written proposals.
- Delaying discussions with the Servicer until the property is already in distress.
- Assuming that not paying loan obligations will give you power when you force the monetary default to get transferrd to special servicing.
CMBS Servicers operate within strict structures guided by a Pooling and Servicing agreement, not on relationships. Without a clear plan, borrowers often lose credibility. Brighton Capital Advisors positions itself to effectively navigate Borrowers through the complexities of CMBS servicing by anticipating how servicers think, preparing comprehensive loan modification packages, and working alongside borrowers counsel to protect the Borrower from personal recourse.
CMBS Loan Restructuring Strategies That Work
When CMBS servicers are approached with viable plans, borrowers options for a desired outcome increases. Cohen discussed several strategies that can produce favorable results:
- Loan extensions to allow time for stabilization of asset for refiance or sale.
- Discounted payoffs when property value does not support the original balance and borrower is awarded a discount on the loan payoff due to the borrowers willingness to work with the Special servicer. Note, most Discounted Payoffs come with a clawback on any excess monies earned from a sale of the property above the discounted payoff amount within 2-3 years from the original discounted payoff.
- A/B note structures that split debt into current value (A Note) and a Mezzanine Note (B Note or “Hope (the Lender gets some money back) note) tied to future recovery.
Each solution requires a complete presentation incorporating all of the borrowers needs. “It is easier to negotiate things off the table than to add them later,” Cohen said. “You have to go in with a complete plan that demonstrates value and a path forward”.
Lessons From Past Crises and the Current Market
Cohen compared today’s situation with the Global Financial Crisis. In 2008, liquidity was the central problem, Banks were selling loans at discounts or structuring A/B notes. In 2025, banks are well capitalized, but high interest rates and falling valuations are straining borrowers and limiting ability to sell or refinance the loan. Special servicers can be more patient , as they incentivized by earning fees, however, as the valuations stabilize and transactio volumes increase Servicers are becoming more aggressive to foreclose and sell the asset.
The volume of loans maturing compounds the issue. With approximately $150 billion of CMBS loan maturities in the fourth quarter of 2025 alone, with 80% of those loans with coupons under five percent, distress will rise as a majority of these will require a cash-in refinance. Servicers already facing heavy workloads will not show patience for borrowers who wait too long or arrive unprepared.
The Role of Advisors in CMBS Negotiations
Behind every loan is a borrower who has invested significant capital and effort. Cohen explained that effective advisors protect that investment by anticipating servicer behavior and crafting solutions that meet legal, business, and operational requirements.
At Brighton Capital Advisors, the team blends complementary backgrounds: Cohen’s origination, underwriting and securitization expertise, a former senior loan closer within CMBS conduit and and co-head of Special servicing experience at Bank of America, and a former CMBS Special servicer with decades of experienceat Wells Fargo. This combination allows the firm to align borrowers and their counsel, creating strategies that servicers take seriously.
Final Takeaways for Borrowers
Cohen concluded the interview with a reminder that today’s market requires preparation and proactive communication. The environment is harsher, but with the right approach and team, borrowers can still achieve favorable outcomes.
“You have worked hard for this property. You want to save it, but you can only do it under the right loan structure. With the right approach, we can help you get there”.
For the full episode, watch Michael Cohen’s appearance on Real Talk.
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