The LMA REF Document is commonly used for investing in commercial real estate in the UK and other European markets. It serves as the standard for bilateral and syndicated transactions.
The LMA Single Currency Term Facility Agreement for Real Estate Finance Multiproperty Investment Transactions document is used for investment purposes only, not for the development of property. For the financing of real estate development, the Single Currency Term Facility Agreement for Real Estate Finance Development Transactions is used.
In addition to provisions common to the REF Development Document, the LMA REF investment document assumes:
- One or more wholly and directly owned special purpose companies (SPVs) set up by the “Company” solely for the transaction, to act as “Borrowers” and to acquire certain “Properties” for the Company;
- A “Shareholder” invests equity and subordinated debt into the Company, which are downstreamed to the Borrowers;
- A single-currency fixed-term senior loan facility agreement with either a fixed or a floating rate of interest is made between the “Finance Parties” (“Lenders”, “Hedge Counterparties”, “Agent” and “Security Agent”) and the Company and the Borrowers and advanced to each Borrowers to acquire each individual Property – no other form of financing, such as mezzanine debt, is anticipated;
- The Company and each Borrower is an “Obligor”, where each Obligor is "Guarantor" of the indebtedness of every other Obligor;
- When provided on a floating-rate basis, full or partial hedging of the fixed rental income from properties generally by way of an interest rate swap with the “Hedge Counterparty”, as party to the facility agreement and beneficiary of the security package; and
- Security is granted in favor of a security trustee (“Security Agent”) for the lenders.
LMA documentation assumes that the obligors in the financing agreement are companies incorporated in England and Wales, the facility agent is based in London, the property is located in England and Wales or Scotland, and that the facility agreement is governed by English law. Its adaptation is required for use in other markets.