Managing and Structuring CRE-CLOs in Today's Economy: Servicing, Re-investment, Tax and Eligible Assets

Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Real Property - Finance
- event Date
Tuesday, April 18, 2023
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will examine the life cycle of commercial real estate collateralized loan obligations (CRE-CLOs). The panel will discuss entity formation, entity-level tax treatment, types of loan collateral, loan origination, the reinvestment timeline, and loan servicing.
Faculty

Mr. Rotblat practices primarily in commercial real estate securities representing major Wall Street investment banks and financial institutions in their roles as issuers, loan sellers, underwriters and placement agents in both public and private offerings of mortgage-backed securities and other structured finance products. He also represents investment banks, specialty finance companies and investment funds structuring and negotiating mortgage loan trades, mortgage loan participations, subordinate loans and asset-backed securities. He also represents special servicers and specialty finance funds in work-outs and restructurings of non-performing commercial mortgage loans in CMBS and CRE CLO transactions. An active participant in CMBS industry trade organizations, Mr. Rotblat often participates in panel presentations at industry conferences. He has been active on behalf of various CMBS industry trade groups in their communications with the U.S. Securities and Exchange Commission regarding legislation affecting the ABS industry. Mr. Rotblat has been recognized for excellence and his specialist knowledge of CRE CLOs.

Mr. Pawling is a special counsel in the Capital Markets Group. His practice is concentrated in the area of structured finance, with an emphasis on representing issuers, underwriters, and mortgage loan sellers in public and private commercial mortgage-backed securitization transactions. Mr. Pawling also has experience representing servicers of performing and distressed CMBS loans in a wide range of matters, including loan work-outs and restructurings. In addition, he has advised bank swap desks entering into interest rate and currency derivative transactions in connection with syndicated credit facilities.

Mr. Silverstein represents issuers, underwriters, insurers and other parties in connection with the tax aspects of mortgage-backed and asset-backed securities, REMICs, CLOs, CRE-CLOs and other debt issuances. He has extensive experience in structuring commercial and residential mortgage-backed securitizations and resecuritizations (including RE-REMICs), and in other capital markets transactions (both agency and “private-label”). Mr. Silverstein advises borrowers and lenders (including securitization vehicles) in connection with loan workouts, foreclosures and restructurings. He is also involved in the re-performing and distressed asset markets and in the formation of lending facilities to finance MSRs, new and/or seasoned mortgage loans and other securities. He also works closely with the firm’s finance attorneys in the origination of large commercial loans for securitization or syndication and in advising loan participants that face challenges in volatile markets. In addition, Mr. Silverstein advises both lenders and borrowers in their negotiations of credit facilities, credit agreements and repos, with extensive knowledge of “taxable mortgage pool” issues and solutions.
Description
CRE-CLOs allow REITs and other mortgage loan funds to finance their loan portfolios with match term funding via the capital markets as an alternative to bank provided repurchase facilities or lines of credit. Unlike traditional CMBS, CRE-CLOs may hold and reinvest principal proceeds, which makes it an attractive vehicle for financing short-term bridge loans.
CRE-CLOs are typically structured as either a qualified REIT subsidiary (QRS) or a foreign corporation.
CRE-CLOs have a limited reinvestment period (typically two years) in which the CLO can reinvest any funds received from repayment or refinancing of portfolio loans into new debt instruments. After that, the CLO manager must revert to receiving and distributing funds to investors as the portfolio amortizes down for the remainder of the life of the CLO.
SPE covenants, recourse carveouts, reserves, cash management, and independent directors are some of the features that may be prerequisite to a loan's inclusion in a CRE-CLO pool.
Listen as our authoritative panel discusses the various nuances of CRE-CLOs, including tax structuring, CLO administration, and loan origination concerns.
Outline
- Purpose and characteristics of CRE-CLOs
- Avoiding entity-level tax by using a QRS or offshore corporation
- Management of the CRE-CLO portfolio
- Reinvestment period
- Loan servicing, modifications, forbearances
- Loan structuring features
- Eligible loans
- SPE borrower
- Cash management/reserves
- Recourse carveouts
Benefits
The panel will review these and other vital issues:
- What are the key servicing differences between a CRE-CLO and traditional CMBS?
- How are borrowers and servicers navigating the rising interest rate environment?
- How should the CRE-CLO be structured to avoid entity-level taxation?
- What kinds of reinvestment are permitted during the reinvestment period?
- What types of loans are eligible, and what are the structuring features of loans that typically go into CRE-CLOs?
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