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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

    Tuesday, May 7, 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 consider key loan document provisions that provide borrowers flexibility and/or lender protections in times of economic uncertainty, including financial covenants, cash management provisions, additional indebtedness, and nonrecourse carveouts, as well as loan disbursement conditions.

Faculty

Megan Vallerie
Partner
McDermott Will & Emery, LLP

Ms. Vallerie advises clients on a broad range of complex real estate transactions on both the debt and equity sides of the table. She has significant experience representing banks, life insurance companies, capital markets lenders, debt funds and other alternative lenders at all levels of the capital stack, including in connection with mortgage and mezzanine financing, securitized loans, construction lending, preferred equity investments, bridge financing and other structured financings, as well as intercreditor, co-lender and participation arrangements. Ms. Vallerie also regularly represents institutional investors, operators and developers in the acquisition, financing, development, operation and disposition of various assets, including retail, office, multifamily, industrial, medical office and life science properties.

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David B. Kostman
Partner
Loeb & Loeb LLP

Mr. Kostman’s practice focuses primarily on real estate finance, with a concentration on the origination, sale, securitization, and servicing of commercial mortgage loans. He represents local, regional and national lending institutions as well as real estate developers and investors. Mr. Kostman also has experience in office and retail leasing, construction and development, and purchases and sales of real estate.

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Description

The current commercial real estate market has presented new challenges for borrowers and lenders and has impacted the initial drafting of loan documents or required modification of existing documents. Lenders might include new covenants and obligations in loan documents, while borrowers will want to negotiate for protections related to factors beyond their control.

Lenders and borrowers should consider whether relief from debt service coverage and other financial covenants will be necessary. If borrowers own properties where tenants seek rent reduction or forgiveness, borrowers should consider the impact on any financial and leasing covenants. Lockbox provisions may need to be revised to provide the lender with more flexibility in addressing tenant vacancies or debt-service coverage ratio (DSCR) triggers.

In construction loans or other loans with a future funding component, borrowers may be unable to satisfy conditions precedent to disbursement due to force majeure clauses and their inability to make continuing representations and warranties required by lenders. Current and future documents may need revisions to address disbursement issues.

Documents may also need to contemplate additional indebtedness and whether the borrower will be entitled to loan forgiveness or to prepay the loan before the maturity of the senior debt. Also, current market conditions may force borrowers and lenders to revisit nonrecourse or "bad-boy" carveouts as well as provisions regarding springing liability for bankruptcy or insolvency.

Listen as our authoritative panel discusses financial covenants, cash management, and other lender protection provisions in real estate finance documentation.

Outline

  1. Financial covenants: DSCR, LTV, other
  2. Construction and other loan disbursements: loan balancing conditions, force majeure
  3. Cash management: lockbox triggers
  4. Leasing covenants and occupancy requirements
  5. Reps and warranties
  6. Recourse carveouts
  7. Additional financing

Benefits

The panel will review these and other documentation issues:

  • How should loan documents address commercial and retail tenant defaults?
  • What changes may be necessary to DSCR and other covenants to avoid loan defaults or cash management triggers?
  • How should loans involving future disbursements be tailored to address the current economic uncertainty?
  • What revisions should be made to subordinate financing provisions to accommodate other financing?