Structuring Real Estate Loans With Foreign Borrowers, Trusts and Tenants in Common

Documenting U.S. Assets of Foreign Guarantors, Reviewing TIC Agreements, Revocable vs. Irrevocable Trusts, and More

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


Conducted on Tuesday, March 28, 2017
Recorded event now available


This CLE webinar will enable counsel to structure real estate loans with borrowers which are comprised of foreign investors and guarantors; trusts as investors or guarantors; and tenants in common (TICs). Lending standards have evolved for how each should be handled. The panel will discuss issues unique to each type of borrower, as well as additional due diligence and loan document revisions needed to address those issues.

Description

Nonstandard borrowers and guarantors present underwriting and documentation challenges for lenders. Counsel must know how to structure loans with each type of borrower and guarantor. For borrowers which include foreign investors, lenders will require foreign as well as domestic anti-terrorism, anti-money laundering, and credit/litigation searches on each investor.

To allow for suit and collection in the U.S., foreign guarantors should be underwritten based on U.S.-held assets and agree to maintain a minimum U.S. net worth and liquidity throughout the loan term.

Where the borrower is comprised of TICs, there must be a tenant-in-common agreement which appoints a managing agent, subordinates any TIC claims to the loan, and otherwise addresses the parties’ relation to each other and the lender.

Trusts require special attention. Counsel must identify the assets in the trust, determine whether the trust is revocable, and understand conditions for removal of the trustee and how death or insolvency of the trustee or beneficiaries impacts control. Beneficiaries as well as the trustees may have to be underwritten as principals in the transaction.

Listen as our authoritative panel prepares lender’s and borrower’s counsel to structure transactions where borrowers are either foreign investors and guarantors; trusts as investors or guarantors; and/or TICs. The panel will review due diligence concerns with foreign investors, the role of U.S. assets and U.S. agent for foreign guarantors, subordination and other key TIC agreement provisions, the trustee-beneficiary relationship of the trustee, revocable trusts, U.S. SPE borrowers in these transactions, and more.

Outline

  1. Foreign parties as investors and guarantors
    1. OFAC, anti-money laundering and other due diligence
    2. Requirement of domestic assets (if guarantor)
    3. Need for domestic single purpose entity
    4. Appointment of U.S. agent; loan document revisions
  2. Tenants in common
    1. Key provisions in TIC agreement
    2. Need for each TIC to be an SPE
    3. Appointment of managing TIC or other designated manager
    4. Subordination of TIC agreement and TIC claims; loan document revisions
  3. Trusts as investors and guarantors
    1. Revocable vs. irrevocable trust—nailing down trust assets
    2. Role of trustee, beneficiaries—identifying control issues
    3. Transfer and other loan document revisions

Benefits

The panel will review these and other key issues:

  • What are the additional due diligence and structuring requirements for borrowers with foreign investors?
  • Why are U.S. assets and a U.S. agent for service important for loans with foreign guarantors?
  • How should TIC borrowers be structured, and what provisions are critical in the TIC agreement and the loan documents?
  • What are the key issues that arise in lending to trusts, and how should those transactions be documented?

Faculty

Gerard C. Keegan, Jr., Partner
Alston & Bird, New York

Mr. Keegan is Co-Chair of the firm’s Real Estate Finance and Investment Group. He represents institutional lenders in all aspects of real estate financings and restructurings and investors in the acquisition, development and operation of commercial properties, including retail, office, hospitality and mixed-use projects. Mr. Keegan has expertise in the representation of investment and national banks and other lenders in the origination, securitization, syndication, sale and workout of commercial real estate loans.

Jon S. Robins, Partner
Klehr Harrison Harvey Branzburg, Philadelphia

Mr. Robins' practice includes a full range of finance, equity investment and real estate activities for private equity funds, capital markets and institutional lenders, REITs, developers, owner/operators, corporations, and investors. He represents lenders and financing providers and regularly advises mortgage, mezzanine and commercial lenders and preferred equity investors, as well as investors. Further, Mr. Robins regularly represents CMBS lenders and borrowers in the origination of mortgage and mezzanine loans.


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Very good current, practical and applicable discussion and information provided.

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Clawson & Staubes

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Real Estate Law Advisory Board

David A. Barksdale

Partner

Ballard Spahr

Jacob Bart

Partner

Stroock & Stroock & Lavan

Brian W. Blaesser

Partner

Robinson & Cole

Ronald B. Grais

Of Counsel

Jenner & Block

Ren R. Hayhurst

Partner

Bryan Cave

Thomas C. Homburger

Of Counsel

K&L Gates

Susan C. Tarnower

Counsel

Kilpatrick Townsend & Stockton

Clark T. Thiel

Partner

Jones Day

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