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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

  • work Practice Area

    Real Property - Finance

Date & Time
  • event Date

    Wednesday, July 21, 2021

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE course will discuss current uses and structuring alternatives for bridge loans, including senior, mezzanine and preferred equity. The panel will also examine the additional risks and legacy issues associated with transitional properties, and provide guidance on how they can be addressed in bridge financing documentation.

Faculty

Carolyn Austin
Partner
Greenspoon Marder

Ms. Austin focuses her practice on matters including the representation of institutional, fund and private capital sources in the origination, purchase, disposition, and restructuring of senior and mezzanine real estate and corporate loans, loan participation interests, and preferred equity investments with respect to every major asset type, including multifamily, retail, industrial, office, hotel, mixed use, rental and re-sale condominium and student housing properties.

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Mark S. Fawer
Partner
Greenspoon Marder

Mr. Fawer focuses his practice on the representation of institutional, fund and private capital sources in every aspect of senior and subordinate real estate financing and equity investment, including stretch senior, bridge and mezzanine lending, B-notes and preferred equity and joint venture investments, covering every major asset type, such as rental and for sale residential, hospitality, retail, office, student housing, mixed use and industrial properties.  In his practice, Mr. Fawer has helped structure cutting edge financings and investments in some of the most challenging contexts.

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Description

COVID-19 has altered the commercial real estate landscape in many ways. It has accelerated the deterioration of bricks and mortar retail, shutdown business travel impacting hotels, caused office properties to face uncertain demand for space due to the new work-at-home paradigm, and more. Bridge loans provide a financing alternative for transitional properties where renovations, repairs or leasing need to be done before a borrower can qualify for a "permanent" loan.

Bridge loans are typically shorter term (1-3 years) and involve higher risk than conventional loans, due to the uncertainties associated with property improvements, leasing and other conditions attached to the loan. Insurance and indemnity provisions take on added importance. There may also be legacy issues such as incomplete construction, outstanding litigation, or tenant defaults which will need to be addressed in loan documents.

Bridge financing can take the form of senior, junior, mezzanine, or even preferred equity. Counsel should have a thorough understanding of each form of financing, and how best to define the relationship between the bridge loan and any other financing in the intercreditor agreement. Because bridge loans are typically floating rate transactions, special attention must be paid to interest rate provisions and alternative rates as the LIBOR sunset date approaches.

Listen as our authoritative panel discusses the structuring and nuances of bridge financing for transitional properties.

Outline

  1. The basics of bridge loans
    1. Rate: short term (1-3 years), floating rate (e.g., LIBOR transition issues) reserves
    2. Structure: senior, mezzanine and/or preferred equity
    3. Overview of intercreditor and recognition agreements
  2. Topical issues arising from market changes wrought by COVID
    1. Bridge loans typically well-suited for value-add deals
      1. Repurposing of assets, e.g., office conversion to residential, retail conversion to alternative uses
      2. Hotels: re-branding and re-opening issues and challenges
    2. New attention to force majeure clauses: borrower and lender issues
    3. Insurance coverage: changing requirements
    4. Supply chain: how are labor and supply constraints being addressed
  3. Legacy issues: how are inherited problems being dealt with, including
    1. Unfinished work: mechanic’s liens and contractor disputes
    2. Tenant defaults
    3. Outstanding litigation

Benefits

The panel will review these and other key issues:

  • What are some property transition scenarios in which a bridge loan would be particularly useful?
  • How have indemnity provisions and insurance coverage evolved during the pandemic, and how are they reflected in bridge loans?
  • What are pros and cons of mezzanine vs. preferred equity financing?
  • What due diligence should be conducted on the borrower and the property to identify legacy issues?