Structuring Revolving Lines of Credit for Multiple Property Portfolios

Allowing for Draws and Repayments, Adding or Releasing Property, and More

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

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Conducted on Tuesday, November 15, 2022

Recorded event now available

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Course Materials

This CLE course will brief real estate counsel on the advantages of using a revolving line of credit to finance a commercial real estate portfolio and on how revolving lines are structured and documented.

Description

Revolving lines of credit present a financing structure alternative for developers and other borrowers who are active in the real estate marketplace and desire the ability to acquire, develop, sell, and refinance properties in their portfolios without entering into a new loan transaction each time.

The revolving line of credit allows the borrower to draw funds as needed to finance the purchase of additional property or for other purposes and pay down the loan balance should it sell a property, without a requirement of defeasance or yield maintenance.

Listen as our authoritative panel discusses these credit facilities' legal issues and documentation and the procedures for making draws and repayments (and obtaining releases). They will also review other attributes of these loans, typically short-term with a floating interest rate and requiring interest rate hedging.

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Outline

  1. Advantages of revolving lines of credit over standard mortgage financing
    1. Opportunistic acquisition; an assemblage of portfolio or sale of properties out of the portfolio
    2. Ability to make draws and pay down loan balance without penalty
  2. Loan terms generally
    1. Structure overview
    2. Procedures for draws outlined in loan documents: expedited "closings"
    3. Short-term; floating rate (hedged)
  3. Documentation
    1. Borrower and entity structures
    2. Holding company: pledge of equity interests; UCC perfection
    3. Individual borrowers and properties
      1. Joinder agreement
      2. Borrower formation documents; reps and warranties
      3. Mortgages on each property (if required)
  4. Title issues

Benefits

The panel will review these and other key issues:

  • The problems with standard permanent mortgage loans and the additional flexibility provided under a revolving line of credit
  • How to best structure the line of credit borrower
  • Adding new borrowers under joinder agreements
  • Pledging of equity interests as security and UCC perfection issues
  • Cross-collateralization of mortgages and when mortgages are required

Faculty

Dreyfus, Caroline
Caroline W. Dreyfus

Partner
Cox Castle & Nicholson

Ms. Dreyfus is a finance attorney with a practice that involves assets in every state, having represented every type of...  |  Read More

Strayer, Matthew
Matthew L. Strayer

Attorney
Bricker & Eckler

Mr. Strayer represents buyers, sellers, owners, developers, and lending institutions on real estate projects involving...  |  Read More

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