Real estate finance—development facilities—key features
Real estate finance—development facilities—key features

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Real estate finance—development facilities—key features
  • Structure of a real estate finance development transaction
  • Security in a real estate finance development transaction
  • Security over the development documents
  • Guarantees
  • Drawdown, repayment and prepayment
  • Drawdown
  • Repayment
  • Mandatory prepayment
  • Restrictions on voluntary prepayment
  • More...

Coronavirus (COVID-19): For information on the implications of the coronavirus outbreak on real estate finance, see Practice Note: Coronavirus (COVID-19)—implications for real estate finance transactions.

Many of the features of a typical real estate finance investment facility will be applicable to real estate finance development transactions. For information on the key features of real estate finance investment facilities, see Practice Note: Real estate finance—investment facilities—key features.

This Practice Note examines the key features of development facilities and how they differ from investment facilities.

Real estate finance development facilities involve a loan to the borrower for it to purchase and develop a property (or a group of properties) or to develop a property (or group of properties) that it already owns. This financing is secured against the property, the development documentation and the future cashflow generated by the property (ie rental income) once the development (or part of it) has been completed. The due diligence carried out in relation to the property and the planned development is one of the most important aspects of the transaction prior to the funding being provided. It is also important that the development is closely monitored throughout the development phase of the project and thereafter that the value and condition of the property are maintained.

Structure of a real estate finance development transaction

The typical structure of a real estate finance development transaction is:

Key

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