Structuring REIT Credit Facilities: Loan Terms, Financial Covenants, Commitment Letters, MAC Provisions and More

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


Conducted on Thursday, October 6, 2016

Recorded event now available

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Program Materials

This CLE webinar will discuss terms and trends in REIT credit facilities, including how to structure the facility, negotiate financial covenants, treat taxable REIT subsidiaries, structure commitment letters, MAC clauses and other key terms

Description

While the syndicated loan market has experienced instability in the past year, REIT borrowers continue to be active in this loan market. Due to the growth of REITs and their need for debt financing, real estate lending to REITs continues to grow.

As a result, REIT borrowers are seeing very borrower-favorable terms in credit facilities, particularly with respect to financial maintenance covenants. Many REITS are finding it easier to achieve lower borrowing rates and increased extension options.

REIT entities and their business plans have unique characteristics not present in traditional corporate borrowers that counsel for both lenders and REIT borrowers must consider as the loan structure is documented.

Listen as our authoritative panel of real estate finance attorneys analyzes current trends in REIT credit facilities, issues to consider in structuring the facility, and market loan terms—including ever-evolving financial covenants, subsidiaries, terms sheets and MAC clauses.

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Outline

  1. Structuring the credit facility
    1. Secured vs. unsecured
    2. Treatments of taxable REIT subsidiaries
    3. Restrictions on investments
    4. Investment-grade transition
  2. Term sheets and commitment letters
    1. MAC clauses
    2. Lender fees
  3. Loan terms
    1. Borrowing rate
    2. Extension options
    3. Financial covenants
      1. Tangible net worth
      2. Total asset covenants
      3. Debt ratios after acquisition
      4. REIT level financial covenants

Benefits

The panel will review these and other key issues:

  • Legal considerations for structuring the credit facility
  • Use of commitment letters and key issues such as MAC provisions
  • Evolving financial maintenance covenants
  • Key loan document terms needed to satisfy operational and tax concerns of the REIT entity

Faculty

Blaut, Ari
Ari B. Blaut

Partner
Sullivan & Cromwell

Mr. Blaut maintains a broad corporate practice advising clients on a wide range of financing transactions, including...  |  Read More

Weber, Benjamin
Benjamin R. Weber

Partner
Sullivan & Cromwell

Mr. Weber has experience in a broad range of commercial real estate, corporate finance, and private and public...  |  Read More

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