Structuring Tenant Letters of Credit in Commercial Real Estate Transactions

Balancing Interests of Landlord, Landlord's Lender, Tenant, and Issuers of Credit

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


Conducted on Thursday, April 10, 2014

Recorded event now available

or call 1-800-926-7926
Program Materials

This CLE webinar will address the benefits and disadvantages of tenant letters of credit as an alternative to other forms of security, overcoming enforcement and bankruptcy risks through effective lease provisions, and other issues to satisfy interests of landlords, lenders and tenants.

Description

Commercial landlords can mitigate risk of tenant financial distress and bankruptcy by insisting on tenant letters of credit as an alternative to cash security deposits. The landlord’s lender, who also has a strong interest in credit enhancements from the borrower’s tenants, may insist that security deposits be held in a certain form. 

Unlike cash, letters of credit are outside the reach of creditors in the event of the tenant’s bankruptcy. While an individual guarantor is another alternative to a cash deposit, guarantors may face exposure associated with the tenant’s bankruptcy. Letters of credit avoid both exposures for the landlord and its lender.

Bankruptcy’s automatic stay can prohibit the landlord from drawing on the letter of credit if the letter is conditioned upon notice of an event of default. Thus, the lease provisions must be carefully drafted to provide the landlord the maximum flexibility to draw on the letter of credit in a timely manner.

Listen as our authoritative panel of attorneys discusses the use of tenant letters of credits in commercial leasing transactions, enforcement and tenant bankruptcy risk, structuring lease provisions when using letters of credit and best practices for balancing the interests of all parties involved.

READ MORE

Outline

  1. Advantages and disadvantages of tenant letters of credit
  2. Advantages of letters of credit as an alternative to other forms of security
  3. Enforcement concerns, including tenant bankruptcy
  4. Drafting lease provisions addressing letters of credit
  5. Balancing interests of landlord vs. landlord’s lender vs. tenant

Benefits

The panel will review these and other key questions:

  • What are the benefits of letters of credit over other forms of security deposits in commercial leasing transactions?
  • How are letters of credit more beneficial to landlords in event of a tenant’s bankruptcy?
  • What is the landlord’s lender’s interest in the letter of credit as a security enhancement?
  • What are best practices for drafting lease provisions when using tenant letters of credit?

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.

Faculty

Joyce A. Kuhns
Joyce A. Kuhns

Partner
Saul Ewing

Ms. Kuhns has over 30 years’ experience providing strategic advice to a wide spectrum of clients from...  |  Read More

Howard R. Majev
Howard R. Majev

Partner
Saul Ewing

Mr. Majev is a seasoned real estate attorney with extensive experience in acquisitions, dispositions, financings,...  |  Read More

Amol K. Pachnanda
Amol K. Pachnanda

Partner
Ingram Yuzek Gainen Carroll & Bertolotti

Mr. Pachnanda is a member of the firm’s Real Estate Group with a focus on commercial real estate law and...  |  Read More

Other Formats
— Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. All formats include program handouts. To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Audio

$297

Download

$297