HVCRE Loans: Guidance for Developers and Lenders on New ADC Rules, Impact on Loan Covenants
Navigating Borrower Contributed Capital Rules, Maximum LTV Ratio, Conversion to Permanent Financing and More
A live 90-minute premium CLE webinar with interactive Q&A
This CLE webinar will be a timely update on the high volatility commercial real estate (HVCRE) regime. Our panel will discuss Basel III requirements and exemptions for HVCRE loans, and the recent reforms to Dodd-Frank which modify those requirements for acquisition, development or
construction (ADC) loans. The program will also discuss how lenders are revising covenants in loan documentation in response to the HVCRE rules and the uncertainties facing borrowers.
- Basel III rules
- Definition of an HVCRE loan
- Exemption criteria
- Impact on real estate and construction lending landscape
- Outstanding issues addressed by bank regulator FAQs
- Contributing additional capital to an existing HVCRE loan
- Grandfathering of current ADC loans
- Cash provided by the second mortgage on a property
- As-stabilized value
- Land committed to a new development
- Soft costs as contributed capital
- Subsequent appraisal/valuation resulting in LTV no longer exceeding maximum LTV ration
- Contributed capital remaining in the project
- Impact of mezzanine debt
- Typical loan covenants addressing HVCRE rules
- Borrower concerns
The panel will review these and other critical issues:
- Can the borrower contribute additional capital to an existing HVCRE loan after funds have been advanced to exclude the loan from the definition of HVCRE?
- Can the as-stabilized value be used to determine whether the loan is an HVCRE exposure?
- Are soft costs part of the borrower's contributed capital as development expenses?
- If land purchased with cash is subsequently contributed to a new development, does it count as contributed capital?
Executive Vice President, U.S. Head of CRE
Mr. Gerken is a seasoned leader with more than 20 years of experience overseeing commercial real estate for top... | Read More
Mr. Gerken is a seasoned leader with more than 20 years of experience overseeing commercial real estate for top U.S.banks, with expertise growing multi-billion dollar assets and developing world-class teams.Close
Joseph Philip Forte
Sullivan & Worcester
Mr. Forte has substantial experience in commercial real estate capital markets and finance, with a particular... | Read More
Mr. Forte has substantial experience in commercial real estate capital markets and finance, with a particular emphasis on the origination, structuring, workout and enforcement of commercial mortgage loans. His experience includes permanent, bridge and construction mortgage lending; mezzanine finance; pari passu and subordinate debt; co-lending and participation arrangements; loan sales and purchases; loan workouts, foreclosures and restructurings; and environmental risk management for lenders. Mr. Forte has served as Co-Chair of the Real Estate Roundtable High Volatility Commercial Real Estate (HVCRE) Working Group developing regulatory/legislative clarification of the HVCRE Rule as it affects construction lending.Close
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