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Loan Syndication

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What due diligence is performed in RE development finance?

The initial stage of a property development project is focused on due diligence, research and permitting, for which financing from lenders can be quite difficult.  Property and dev…


What due diligence is performed in acquisition finance?

Due diligence in acquisition finance is performed by investors to verify the validity, reliability and accuracy of information provided, to ensure that there is agreement with the…


What determines syndicate structuring?

Depending on the syndication strategy, lead arrangers identify and decide on which banks to invite to participate, the tiers according to commitment (“ticket”), decide on titles ac…


What determines participant-MLA relationships?

Where primary syndication is included after the initial underwriting, the total commitment of mandated lead arrangers is first marketed and distributed among sub-underwriters.  Eac…


What determines CRE underwriting?

Lender underwriting parameters depend on the degree of exposure to a client or sector and the investment criteria.  This can include transaction size, the degree of leverage, geogr…


What determines CRE finance structuring?

CRE loans are fundamentally different from commercial and industrial (C&I) loans in terms of loan documentation, collateral, assignment and transfer restrictions, liquidity exp…


What determines borrower-MLA relationships?

Lead arrangers develop a relationship with borrowers, originate the facilities, negotiate terms, underwrite the financing, and arrange and lead the syndication of the facilities. …


What credit ratios are used in asset-based lending?

In asset-based lending, it is critical that the income generating capacity of the asset serving as collateral is carefully analyze and fully understand.  For example, the loan-to-v…


What are upfront fees?

Upfront fees are the one-off fees paid by borrowers to mandated lead arrangers on the total commitment amount for arranging and originating the financing, structuring the syndicate…


What are underwriting spreads?

In an underwritten deal, the lead arranger retains some amount of the underwriting fee as compensation for its services and uses the rest either as sub-underwriter or closing fees….


What are tranches?

A tranche is a distinct part of a financing transaction with its own terms, as defined in the common financing agreement.  Leveraged facility agreements commonly comprise multiple…


What are the syndicate titles?

The lead arranger assigns syndicate roles and titles.  Sub-underwriters and participant lenders are generally awarded titles based on the amount of their commitment and in the phas…


What are the standard REF facility documents?

The Loan Market Association (LMA) issued in 2012 the Single Currency Term Facility Agreement for Real Estate Finance Multiproperty Investment Transactions (“REF Document”) used in…


What are the parties to real estate finance?

The roles of the arrangers, lenders and agents are essentially the same in LMA REF facility agreements as in the LMA Primary Document.  The roles of the security agent and hedge co…


What are the market flex variations?

Market flex is the right of arrangers (bookrunners) in a loan syndication to unilaterally adjust the pricing, structure and/or terms and possibly the total amount of the financing…


What are the mandate bidding strategies?

There are three ways for a bank to approach the bidding for the lead arranger mandate, each in accordance with the bank’s interest in being awarded: Bid to win – If a deal appears…


What are the lead arranger functions?

The lead arranger performs the key functions of: Origination – The process by which a lender originates, develops and closes financing transactions, it beginning with borrower acqu…


What are the key syndicate roles?

As underwriter, the lead arranger initially commits to provide the required financing to a borrower in primary syndication and acts as bookrunner.  A sub-underwriter commits to tak…


What are the basic participant-arranger relationships?

The initial underwriting of the financing by the mandated lead arrangers triggers the start of primary syndication.  After this, and depending on the syndication strategy, it proce…


What are the basic arranger-participant relationships?

The initial underwriting of the financing by the mandated lead arrangers triggers the start of primary syndication.  After this, and depending on the syndication strategy, it proce…


What are term loans?

A term loan is a fixed- or variable-rate secured or unsecured loan made available with a fixed maturity in excess of one year and up to a specified amount in order to acquire long-…


What are template term sheets?

Unlike the Loan Market Association (LMA) and the Asia Pacific Loan Market Association (APLMA), the Loan Syndications & Trading Association (LSTA) does not publish a recommended…


What are syndicated facilities?

A syndicated facility is financing in which revolving credit or a term loan facility is arranged and provided in direct syndication and/or funded in a participationby more than one…


What are shareholder and vendor loans?

An equity-investor loan is intra-group funding provided by the equity sponsor/investors to the parent company of the acquiring company evidenced by loan notes and downstreamed to t…


What are roll-overs and term-outs?

Unlike term loans, with revolving facilities borrowers are at risk of lender refusal or inability to advance further funds until the end of the availability period.  Prior to the e…


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