Commercial Real Estate Financing in the Credit Market Crisis

Legal Strategies for Negotiating and Documenting Financial Instruments

Maximizing Traditional and Alternative Financing Opportunities

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


Conducted on Tuesday, April 29, 2008

Program Materials

Description

Attorneys for real estate developers cite the limited availability of funding and the declining value of the dollar as key challenges currently facing the commercial real estate industry.

Until recently, credit for real estate construction was free-flowing, with many borrowers able to finance 80% of their commercial properties through a combination of first lien and higher interest rate mezzanine or other subordinate financing.

As commercial loan defaults have increased, lenders have tightened their underwriting standards, requiring borrowers to find nontraditional financing sources, put more of their own money into transactions, meet higher debt coverage requirements, accept higher interest rates and pay higher premiums.

Listen as our panel of real estate counsel and lenders' counsel explains the impact of the credit market crisis on commercial real estate financing and offers best practices for developers' counsel for identifying alternative funding sources and negotiating and documenting a commercial real estate loan.

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Outline

  1. Impact of credit market crisis
    1. Traditional lending market
    2. Commercial Mortgage Backed Securities (CMBS) market
    3. Collateralized Debt Obligation (CDO) market
    4. Drop in commercial real estate prices and demand
  2. Traditional and non-traditional financing sources
    1. Syndicated loans
    2. Agency loans
    3. Portfolio lenders/insurance companies
    4. Self-financing and loan purchases
    5. Other sources of financing
  3. Negotiating and documenting loan agreements in crisis
    1. Reservation of rights letter
    2. Forbearance agreement
    3. State statutes on forbearance
    4. Estoppel letters
    5. Construction loans — payment and performance bonds
    6. Construction loans — assignment of contracts
    7. SNDA agreements
    8. Default defined
  4. Deed in lieu of foreclosure
    1. Judicial and nonjudicial foreclosure

Benefits

The panel reviewed these and other key questions: 

  • How has the current credit market crisis impacted the availability of financing for construction projects?
  • What nontraditional sources of financing are available and feasible for real estate developers?
  • How can the real estate loan agreement be drafted to minimize developers' legal risk?
  • What are some best practices for crafting real estate loan documentation?

Faculty

Michael Weissman
Michael Weissman
Of Counsel
Holland & Knight

His practice is devoted to structuring a wide variety of financing transactions. He has represented most of the major...  |  Read More

Thomas C. Homburger
Thomas C. Homburger
Partner
Bell Boyd & Lloyd

He concentrates in the area of real estate financing, development and investment, and is particularly noted for his...  |  Read More

Izabela E. Boltryk
Izabela E. Boltryk
Dechert

She focuses in the area of real estate finance, including securitization transactions and the representation of...  |  Read More