Future Advance Obligations in Commercial Mortgage Finance: Structuring, Co-Lender and Securitization Issues
Recording of a 90-minute premium CLE video webinar with Q&A
This CLE course will discuss the mechanics of future advance clauses in commercial real estate lending. The panel will analyze the types of events future advance clauses typically address, the draw conditions which must be negotiated between the parties, and the complex dynamics of making additional loan disbursements where the loan has been syndicated or securitized.
Outline
- Future advance clauses in the current lending environment
- Conditions for future advances
- Tenant buildout and other capital expenditures
- Leasing
- Additional collateral
- Earnout based on financial parameters: occupancy, DSCR
- Approval and disbursement of the future advance
- Documentation
- Title issues
- Consent from other lenders
- Securitization issues
- Bifurcating the initial and future advance with separate notes
- Servicing issues in the event of default
- Applying prepayments
Benefits
The panel will review these and other important questions:
- What are the advantages and disadvantages of a future advance clause vs. an earnout reserve funded at closing?
- What are the different types of conditions attached to future advances, and what are the key drafting points?
- How should approval and disbursement of a future advance be documented in the loan structure with multiple lenders?
- Why should the initial advance and future advance be bifurcated for securitization purposes, and what other issues need to be addressed?
Faculty
Jeffrey R. Escobar
Partner
Dorsey & Whitney
Mr. Escobar advises horizontal and vertical project owners, real estate companies, joint ventures, institutional... | Read More
Mr. Escobar advises horizontal and vertical project owners, real estate companies, joint ventures, institutional owners, closely held developers, lenders, investors and private equity funds across the U.S. and throughout the Americas on their deployment of capital on their most complex and large-scale projects. From the construction of a professional sports stadium and the only aerial commuter tramway system in the country, to the development and construction of large luxury apartment communities and the engineering of energy facilities, there is no energy, infrastructure, real estate, construction or development project too large or too small that Mr. Escobar has not had experience leading.
Close
Virginia (Ginger) Rolfes
Partner
Nelson Mullins Riley & Scarborough
Ms. Rolfes is a real estate and finance attorney with more than 15 years of experience. She is experienced in... | Read More
Ms. Rolfes is a real estate and finance attorney with more than 15 years of experience. She is experienced in commercial lending, asset management, finance, leasing, and general real estate matters. She has experience in originating commercial real estate loans that are securitized and sold on the bond market (also known as commercial mortgage backed securities or CMBS). Ms. Rolfes represents banks and other lending institutions making loans on commercial properties such as office developments, retail centers, hotels, and manufactured housing complexes, among others. Ginger also works with tenants in the negotiation of a variety of leases and related issues and regional developers in the purchase and sale of commercial properties.
Close