Cash Management Structures, Waterfall Provisions and Reserves in Commercial Real Estate Finance Transactions

Negotiating Lockboxes, Waterfalls and Deposit Account Control Agreements

Recording of a 90-minute CLE webinar with Q&A


Conducted on Tuesday, June 27, 2017

Recorded event now available

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Program Materials

This CLE webinar will discuss a variety of lockbox/cash management structures, how to structure waterfall provisions in cash management agreements and drafting the ancillary agreements for cash management.

Description

In the immediate aftermath of the credit crisis, borrowers experienced the tightening of cash management arrangements in real estate loans, particularly for those loans intended to be securitized. With the improvement of the commercial real estate market, borrowers have seen 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 prior to funds being dispersed 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 occurrence of a specified triggering event, such as loan default.

Listen as our authoritative panel of real estate finance practitioners guides you through current terms and trends in lockbox/cash management systems. The panel will discuss structuring waterfall provisions in cash management agreements and drafting ancillary agreements, including the deposit control account agreement.

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Outline

  1. Types and terminology of lockbox/cash management structures
    1. Hard lockboxes
    2. Soft or springing lockboxes
  2. Typical cash management waterfall provisions
  3. Negotiating and drafting cash management agreements and deposit account control agreements
  4. Cash management in mezzanine and non-securitized loans
  5. Reserve funds, cash collateral and pledged accounts

Benefits

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

Faculty

Christopher J. Fernandez
Christopher J. Fernandez

Counsel
Kilpatrick Townsend & Stockton

Mr. Fernandez represents financial institutions and loan portfolio servicers in a variety of transactions. A...  |  Read More

Sally M. Ridenour
Sally M. Ridenour

Counsel
Kilpatrick Townsend & Stockton

Ms. Ridenour concentrates her practice on the representation of lenders in connection with the...  |  Read More

David H. Simpkins, Esq.
David H. Simpkins, Esq.

Kilpatrick Townsend & Stockton

Mr. Simpkins focuses his practice on real estate finance and commercial mortgage-backed securities transactions,...  |  Read More

Susan C. Tarnower
Susan C. Tarnower

Counsel
Kilpatrick Townsend & Stockton

Ms. Tarnower concentrates her practice in the area of commercial real estate. She focuses on special servicing and...  |  Read More

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