Bridge Lending for Commercial Real Estate: Financing for Transitional Properties
Senior, Mezzanine, and Preferred Equity Structures; Allocating Risk, Resolving Legacy Issues
Recording of a 90-minute premium CLE video webinar with Q&A
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.
Outline
- The basics of bridge loans
- Rate: short term (1-3 years), floating rate (e.g., LIBOR transition issues) reserves
- Structure: senior, mezzanine and/or preferred equity
- Overview of intercreditor and recognition agreements
- Topical issues arising from market changes wrought by COVID
- Bridge loans typically well-suited for value-add deals
- Repurposing of assets, e.g., office conversion to residential, retail conversion to alternative uses
- Hotels: re-branding and re-opening issues and challenges
- New attention to force majeure clauses: borrower and lender issues
- Insurance coverage: changing requirements
- Supply chain: how are labor and supply constraints being addressed
- Bridge loans typically well-suited for value-add deals
- Legacy issues: how are inherited problems being dealt with, including
- Unfinished work: mechanic’s liens and contractor disputes
- Tenant defaults
- 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?
Faculty
Carolyn Austin
Partner
Greenspoon Marder
Ms. Austin focuses her practice on matters including the representation of institutional, fund and private capital... | Read More
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... | Read More
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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