Commercial Real Estate Loans 101: Loan Structures and Facilities, Documentation, Advising Borrowers and Lenders

Description

Commercial real estate loans are primarily secured by real estate and related assets of the borrower and are usually obtained from banks, insurance companies, or other institutional lenders to acquire, develop, upgrade, rehabilitate, refinance, or operate a commercial real estate venture.

The terms of a commercial real estate loan vary greatly and depend on the type of loan, lender, property financed, and the borrower's goals and business objectives. The most common types of commercial real estate loans are permanent loans, bridge loans, commercial construction loans, and conduit loans.

There are several significant differences between commercial real estate loans and residential loans, but generally, commercial real estate loans are focused on income generation and have higher interest rates, shorter loan terms with amortization periods that are often longer than the term of the loan, larger down payments, and in some cases the borrower will be required to provide a personal guarantee.

The commercial loan package that secures and provides evidence of the loan contains extensive documentation, including loan agreements that outline the structure and obligations of the parties, promissory notes, mortgages, deeds of trust, assignments of rents and leases, financing statements, environmental indemnity agreements, guaranties, subordination, non-disturbance and attornment agreements, estoppel certificates, and other ancillary documents.

Listen as our authoritative panel provides an overview of commercial real estate loans and examines key considerations when representing borrowers and lenders in these transactions.