Real estate finance—investment facilities—key features
Real estate finance—investment facilities—key features

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

  • Real estate finance—investment facilities—key features
  • Structure of a real estate finance investment transaction
  • Security in a real estate finance investment transaction
  • Intercreditor issues in a real estate finance investment transaction
  • Drawdown, repayment and mandatory prepayment
  • Drawdown
  • Repayment
  • Mandatory prepayment
  • Interest and hedging
  • Interest and rental quarter days
  • 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.

Real estate finance investment facilities involve a loan to a borrower for it to purchase a property or a group of properties (or to refinance such a purchase). The financing is secured against the property being purchased (or refinanced) and the cashflow generated by the property (ie rental income). The due diligence carried out in relation to the property is one of the most important aspects of the transaction prior to the funding being provided. It is also important that the value and condition of the property is maintained throughout the term of the financing. The bank account arrangements are very important in real estate finance investment transactions and can be quite complex. In a straightforward transaction, the rental income is typically paid by the tenants into a secured bank account and used to pay the interest and capital on the loan. Any excess cash can usually be swept into the borrower's current account and withdrawn by the borrower.

This Practice Note explains the key features of a typical real estate finance investment transaction. Development facilities involve additional issues which need to be considered—see Practice Note: Real estate finance—development facilities—key features.

Structure of a real estate finance investment transaction

The typical structure of

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