Interest Rate Hedges in Real Estate Finance: Placing Swaps, Caps, and Collars on Floating Rate Loans
Understanding Pricing and Trade Confirmations, the ISDA Master Agreement, Counterparties, Current Regulation of Derivatives
Recording of a 90-minute CLE webinar with Q&A
Conducted on Wednesday, February 22, 2017
Recorded event now available
This CLE webinar will describe hedging transactions and ways to limit the parties' exposure to changes in rates. The panel will describe the role of the hedge counterparty and discuss key aspects of hedge documentation.
Floating rate commercial mortgage loans present interest rate risk for borrowers and lenders. Real estate projects typically generate relatively steady cashflow, yet the parties to the loan must have confidence that the cashflow will be sufficient to pay debt service regardless of increases in interest rates.
Many market participants employ hedges to limit exposure to interest rate risk, with the most popular being rate caps, interest rate swaps, and collars. It is important for real estate counsel to understand how these hedge transactions work and what financial risks they entail.
Listen as our authoritative panel discusses each of these derivatives and how they are priced and memorialized. They will walk through each step of the hedging process and provide examples of the documentation, including the bid sheet, the trade ticket, the confirmation, and the ISDA master agreement and accompanying schedule. They will discuss the required debt ratings for the swap counterparties and cap providers, the issues which arise when an institution’s rating is downgraded, and the additional regulations imposed on derivatives under Dodd Frank. Finally, they will summarize the real estate attorney’s role in the hedge transaction.
- Overview of interest rate hedges
- Purpose—protection against changes in floating rate during loan term
- Caps, swaps and collars
- Pricing and auctions
- Role of counterparty
- Need for collateral
- Interest rate hedge documentation
- Hedge term sheet/bid sheet
- Recorded phone call during which trade is executed
- Trade ticket
- Hedge confirmation
- ISDA Master Agreement
- Schedule to Master Agreement
- Impact of Dodd Frank regulations—eligible contract participant qualifications
- Role of borrower’s and lender’s counsel
The panel will review these and other key issues:
- What kind of interest hedge is appropriate for your transaction?
- What are costs and risks associated with each type of hedge?
- How are hedge transactions bid out, executed, and documented?
- How are swap counterparties and cap providers currently regulated, and what are the qualification, clearing, and margin requirements for hedging transactions?
- What is the role of real estate counsel in the hedge transaction?
Jeffrey H. Koppele, Partner
Mr. Koppele provides advice on both tax and derivatives matters in a wide variety of financial transactions. He advises swap dealers, hedge funds and other market participants in a wide variety of derivatives transactions and structures. Mr. Koppele advises on multiple aspects of derivatives, including product structuring and new product development, documentation matters, closeouts and insolvency issues.
Mark Heimendinger, Of Counsel
Lowndes Drosdick Doster Kantor & Reed,
Mr. Heimendinger has worked on a variety of financing structures and instruments, with a particular focus on real estate finance and structured finance. These include the representation of lenders, borrowers, and underwriters on a variety of transactions, including term and revolving credit facilities, public and private securitization transactions (including CMBS), mezzanine financing, equipment financing, currency and interest rate cap and swap transactions, underwriting agreements, intercreditor agreements, joint ventures, and jurisdiction-specific non-recourse structures. Within the real estate space, he has covered multiple asset classes, including hotels and leisure facilities, office towers, senior living facilities, and multi-family residential buildings. In addition to U.S. transactions, Mark has completed a number of cross-border transactions.
CLE On-Demand - Streaming Video
Includes recorded streaming video of full program plus PDF handouts.
On-demand is the only recorded format recognized for CLE credits in DE, IN, KS, LA, MS, NC, OH, OK, SC, TN, VA, WI.
AK, AZ, CA, CO, CT, DE, FL, GA, HI, IA, ID, IL, IN*, KS, KY, LA, ME, MN, MO, MT, NC, ND, NH**, NJ, NM, NV, NY, OH*, OK, OR, PA, SC, TN, TX, UT, VA, VT, WA, WI, WV, WY (Note: Some states restrict CLE eligibility based on the age of a program. Refer to our state CLE Map for additional information.)
*Only available for attorneys admitted for more than two years. For OH CLE credits, only programs recorded within the current calendar year are eligible - contact the CLE department for verification.
**NH attendees must self-determine if a program is eligible for credit and self-report their attendance.
CLE On-Demand Video $297.00
Available 48 hours after the live event
Includes full event recording plus handouts (available after live webinar).
Strafford is an approved provider and self-study CLE credit is available in most states.
AK, AZ, CA, CO, CT, FL, GA, HI, IA, ID, IL, KY, ME, MN, MO, MT, ND, NJ, NM, NY, OR, PA, TN, TX, UT, VT, WA, WV, WY (Note: Some states restrict CLE eligibility based on the age of a program. Refer to our state CLE Map for additional information.)
Strafford will process CLE credit for one person on each recording.
Additional copies of a recording can be purchased at a discount. Please call Strafford Customer Service toll-free at 1-800-926-7926 ext 10 or email firstname.lastname@example.org to place your order.
Recorded Webinar Download $297.00
Available 48 hours after the live event
Recorded Audio Download (MP3) $297.00
Available 24 hours after the live event
DVD (Slide Presentation with Audio) $297.00
plus $9.45 S&H
Available ten business days after the live event
Strafford webinars offer several options for participation: online viewing of speaker-controlled PowerPoint presentations with audio via computer speakers or via phone; or audio only via telephone (download speaker handouts prior to the program). Please note that our webinars do not feature videos of the presenters.
CLE Credits By State
The speakers knew their topics and spoke in practical terms addressing real business risks.
Kenneth J. Clarkson
It was a very good program with very experienced speakers.
Kimball Tirey & St. John
The program covered a fair amount of material in a short time period.
Bradley Arant Boult Cummings
Webinar contained lots of new information and real life examples.
The speakers were obviously experienced and communicated the relevant information very well.
Dean Mead et al
Real Estate Law Advisory Board
Stroock & Stroock & Lavan
Robinson & Cole
Jenner & Block
Kilpatrick Townsend & Stockton
Strafford webinars are backed by our 100% Unconditional Money-Back Guarantee: if you are not satisfied with any of our products, simply let us know and get a full refund. For more information regarding complaints and refunds, please contact us at 1-800-926-7926 ext 10. Complaints regarding this program can be submitted via the course evaluation found in the “Thank you” e-mail at the end of the course.