Cash Management Structures, Waterfall Provisions, and Reserves in Real Estate Finance Transactions
Negotiating Lockboxes, Waterfalls, and Deposit Account Control Agreements
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Real Property - Finance
- event Date
Tuesday, April 8, 2025
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will discuss a variety of lockbox and cash management structures, how to structure waterfall provisions in cash management agreements, and drafting ancillary contracts for cash management.
Ms. Diamond focuses her practice on commercial real estate finance. She has extensive experience in, and her practice involves, the representation of national banks, debt funds and other institutional lenders in all aspects of the origination, purchase, and sale of portfolio and securitized (both conduit and SASB) commercial mortgage loans, mezzanine loans, syndicated loans, subordinate notes and participation interests secured by commercial real estate properties in all 50 states consisting of all asset types including large, complex single and multi-property transactions and the representation of lenders, servicers and asset managers in connection with restructuring, workouts and foreclosures of both mortgage and mezzanine loans.
Mr. Johnson concentrates his practice in commercial real estate finance. He represents investment banks, commercial banks, debt funds, and life insurance companies in the origination, securitization, syndication, and sale of commercial real estate loans, including loans with leasehold, sub-leasehold, condominium, tenancy-in-common, and 1031-exchange structures. His expertise extends to mezzanine financing, subordinate debt structures, and the restructuring, workout, and foreclosure of loans.
Under current market conditions, borrowers are experiencing a tightening of cash management arrangements in real estate loans, particularly for those loans intended to be securitized. As the commercial real estate market slowly improves, borrowers may see less stringent cash management structures, but cash management remains an integral part of commercial real estate finance.
Terms and conditions of cash management systems are often very heavily negotiated. Lenders seek to ensure that debt service, property expenses, and reserves are paid before funds are disbursed to the borrower. Hard lockboxes offer the most protection to the lender.
Borrowers, on the other hand, want the most control over the revenues that flow from the property. Springing lockboxes allow the borrower more control over rents or revenues since they require the use of a deposit account only upon the occurrence of a specified triggering event, such as loan default.
Listen as our authoritative panel guides you through current terms and trends in lockbox and cash management systems. The group will discuss structuring cash management waterfall provisions and drafting both cash management agreements and deposit control account agreements.
- Types and terminology of lockbox/cash management structures
- Hard lockboxes
- Soft or springing lockboxes
- Typical cash management waterfall provisions
- Negotiating and drafting cash management agreements and deposit account control agreements
- Cash management in mezzanine and non-securitized loans
- Reserve funds and pledged accounts
The panel will review these and other key issues:
- Current terms and trends in cash management systems and waterfall provisions
- Hard lockboxes vs. springing lockboxes
- Key documents and accounts involved in cash management structures
- Drafting the cash management agreement and the deposit account control agreement
