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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Real Property - Finance

Date & Time
  • event Date

    Wednesday, May 29, 2024

  • 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 webinar will discuss the use and structuring alternatives for bridge loans in the current commercial real estate market. The panel will examine the advantages and disadvantages of bridge loans and provide guidance on balancing their utility versus the risks associated with this form of short-term financing.

Faculty

Siobhan O'Donnell Sachs
Partner
Ballard Spahr LLP

Ms. O'Donnell is Team Leader of the firm’s CMBS Loan Origination Team who focuses her practice in the area of commercial real estate finance. She represents investment banks, commercial banks, specialty finance companies, and institutional lenders, as well as real estate developers and owners, in a variety of real estate financing transactions. Ms. O'Donnell represents clients in permanent and bridge loan origination, CMBS conduit loans, construction loans, preferred equity transactions, mezzanine loans, and other subordinate financing structures. She also has significant experience in other aspects of real estate transactions, including leasing and acquisitions and dispositions of real estate.   

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Terry Carroll
Partner
Seyfarth Shaw LLP

Mr. Carroll’s practice is centered on representing lenders in real estate financing matters. His work includes the structuring, closing and servicing of mortgage and mezzanine loans, including permanent loans, CMBS loans, bridge loans and construction loans. Mr. Carroll has extensive experience in real estate finance transactions across the U.S., including multi-state, multi-borrower, cross-defaulted and cross-collateralized transactions. He also represents entrepreneurial and institutional investors in their acquisition, disposition and financing of real property. Mr. Carroll has drafted and negotiated purchase agreements for office, industrial, multifamily and retail properties across the U.S., negotiated loan documents on behalf of borrowers in connection with loans originated by small and large banks, and frequently serves as local counsel for both borrowers and lenders in connection with the origination of loans secured by real property.

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Description

When used optimally, 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. Increased borrowing costs, higher interest rates, and a distressed commercial real estate market have created opportunities within the bridge loan market.

Bridge loans typically have shorter terms--between a few months and a few years. While these loans might have higher interest rates and costs than traditional, permanent financing, there are several advantages to using a bridge loan, including speed of execution and flexibility. However, with their utility also comes risk that must be carefully evaluated to ensure the loan makes sense for a borrower's goals and circumstances.

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 any intercreditor agreement. Because bridge loans are typically floating rate transactions, special attention must also be paid to managing interest rate risk.

Listen as our authoritative panel discusses the structuring and nuances of bridge loans and provides key considerations when weighing the advantages and disadvantages of these short-term financing solutions.

Outline

  1. Overview of bridge loans
    1. Structure: senior, mezzanine, and/or private equity
    2. Rate: short term vs. floating rate
    3. Impact on intercreditor agreements
  2. Current market conditions and reasons for the current rise in bridge loans
  3. Advantages of bridge loans
    1. Fast funding
    2. Flexibility
    3. Prepayment is simple
    4. Interest-only payments
  4. Disadvantages of bridge loans
    1. Higher costs
    2. Loans need to be refinanced quickly
  5. Key considerations for borrowers and lenders

Benefits

The panel will discuss these and other key issues:

  • What are some scenarios in which a bridge loan would be particularly useful?
  • What are the advantages and disadvantages of bridge loans?
  • What are some of the risks associated with bridge loans for both borrowers and lenders under current market conditions?
  • What are pros and cons of mezzanine vs. preferred equity financing?