Defeasance commercial mortgage collateral swap
Defeasance commercial mortgage mechanics replace real property collateral with government securities so the loan remains outstanding after lien release.
Commercial real estate articles
42 articles
Articles on commercial real estate lending for bank credit desks: valuation, covenants, security and loan structures, each cited to the official record.
Distribution lock-up in project finance
A distribution lock-up stops equity payments when coverage tests, reserves or default conditions in the finance documents are not met.
DSCR cash trap trigger in CRE loans
A DSCR cash trap trigger retains excess property cash in lender controlled accounts when debt service coverage falls below a loan agreement threshold.
Environmental site assessment CRE basics
An environmental site assessment CRE review evaluates property conditions, commonly as a Phase I ESA aligned with EPA All Appropriate Inquiries.
Springing recourse in CRE loans
Springing recourse converts a nonrecourse CRE loan into full or partial guarantor liability when defined trigger events occur.
Borrowing base deficiency explained
A borrowing base deficiency arises when loan outstandings exceed borrowing base availability and must be cured under facility terms.
Borrowing base redetermination explained
Borrowing base redetermination resets facility availability from updated collateral valuations, engineering reports or eligibility tests.
Cash trap commercial real estate provisions
A cash trap commercial real estate provision retains excess property cash in lender accounts after waterfall items when triggers occur.
CRE loan assumption in securitised mortgages
A CRE loan assumption transfers borrower obligations on an existing commercial mortgage to a buyer that takes the property subject to lender consent.
Legal entity identifier framework for banks
The legal entity identifier banks use is a 20 character ISO 17442 code uniquely identifying legal entities in the Global LEI System.
Sustainability linked loan structures explained
A sustainability linked loan ties loan economics to KPIs and sustainability performance targets under the LMA APLMA LSTA principles.
Tenant improvement allowance in CRE leases
A tenant improvement allowance is landlord funded fit out consideration in commercial leases that affects CRE cash flow, reserves and underwriting.
Net operating income CRE underwriting
Net operating income CRE underwriting measures property income after operating expenses and is the core numerator for DSCR and capitalisation analysis.
Netting agreement derivatives explained
A netting agreement derivatives structure reduces counterparty exposure to one close-out amount across OTC trades under a master contract.
Pari passu clauses explained
A pari passu clause states that the debt ranks equally in right of payment with other unsecured and unsubordinated obligations of the issuer or borrower.
Preferred equity commercial real estate
Preferred equity commercial real estate is an ownership interest with priority distributions over common equity, ranking below debt in the capital stack.
Interest reserve construction loan
An interest reserve construction loan feature funds interest during construction and lease up from a budgeted reserve line in the facility.
Inventory finance borrowing base explained
Inventory finance borrowing base structures limit revolving advances to eligible stock values inside a wider formula of working assets.
Lockbox account CRE cash management
A lockbox account CRE structure directs tenant and property receipts into a controlled clearing account used for lender cash management waterfalls.
Mezzanine loan commercial real estate
A mezzanine loan commercial real estate facility is subordinate debt secured by a pledge of equity in the property owning entity, not a mortgage lien.
Negative pledge clauses explained
A negative pledge clause restricts a borrower from granting security over assets to other creditors, protecting unsecured or equal ranking lenders.
Debt yield commercial real estate metric
Debt yield commercial real estate is NOI divided by loan amount, a leverage metric independent of interest rate, amortisation and capitalisation rate.
Ground lease financing for commercial real estate
Ground lease financing is mortgage lending secured by a leasehold estate and improvements on leased land, not fee simple title.
Interest coverage ratio in commercial real estate lending
Interest coverage ratio in CRE lending measures earnings against interest expense, distinct from DSCR tests that also include loan amortisation.
Cap rate commercial real estate valuation
A cap rate commercial real estate metric converts stabilised net operating income into value by dividing NOI by an overall capitalisation rate.
Completion guarantee commercial real estate
A completion guarantee commercial real estate undertaking obliges a sponsor to achieve lien free completion per plans, budget and loan terms.
Cross default clauses explained
A cross default clause makes a default under other financial indebtedness an event of default under the loan agreement, subject to thresholds.
Construction loan vs permanent loan
Construction loan vs permanent loan compares ADC building finance with term take-out debt on the completed, income producing property.
CRE DSCR vs project finance DSCR
CRE DSCR vs project finance DSCR compares net operating income cover on property debt with CFADS based cover in limited recourse project loans.
Hard costs vs soft costs explained
Hard costs vs soft costs separates construction and site improvement outlays from interest, fees and other development expenses in CRE project budgets.
LTV vs LTC commercial real estate
LTV vs LTC commercial real estate compares loan amount to appraised value with loan amount to project cost, two leverage tests used across CRE lending.
Covenant waiver process in project finance
The covenant waiver process records lender consent to a breach or prospective breach without rewriting the entire facility.
OFAC 50 percent rule explained
The OFAC 50 percent rule treats an entity owned 50 percent or more, directly or indirectly in aggregate by blocked persons, as itself blocked.
EU AML Directive customer due diligence rules
EU AML directive customer due diligence rules cover identity, beneficial owner, purpose and ongoing monitoring under Directive 2015/849 as amended.
Borrowing base facility explained
A borrowing base facility limits revolving advances to a formula driven percentage of eligible receivables, inventory or other agreed collateral.
Mezzanine vs senior debt in project finance
Mezzanine vs senior debt compared by priority, security ranking, covenants and recovery in project finance.
Early warning signals in credit portfolios
Measurable indicators of credit deterioration in loan portfolios, and how regulated institutions detect them before borrowers default.
KYC vs KYB in bank onboarding
KYC verifies individual customers; KYB establishes business legitimacy and beneficial ownership. Both are mandatory under AML and CTF frameworks.
Loan covenant monitoring between reporting dates
How lenders monitor loan covenants between reporting dates: interim metrics, early warning systems and regulatory expectations.
OFAC, EU, UK and UN sanctions lists compared
A sanctions lists comparison of OFAC, EU, UK and UN regimes, covering maintainers, legal bases, scope and delisting routes.
Screening a company for sanctions exposure
How to screen a company for sanctions exposure across OFAC, UK, EU and UN consolidated lists
Ultimate beneficial owner identification in bank onboarding
How banks identify and verify ultimate beneficial owners during credit origination to manage ownership and control risks.