Real estate finance transactions
Real estate finance transactions

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

  • Real estate finance transactions
  • Types of REF transactions
  • Property investment or property development?
  • Islamic finance structures in real estate finance
  • Drafting term sheets for REF transactions
  • Finance documents in REF transactions
  • Drafting or negotiating a REF facility agreement
  • Drafting and negotiating security documents in a REF transaction
  • Perfection of security in real estate finance transactions
  • The intercreditor arrangements
  • More...

This Practice Note provides an overview of a typical real estate finance (REF) transaction from the term sheet stage through to signing the financing documents, dealing with conditions precedent and, if a default should arise, enforcement of the Lender's security. At each stage, this Practice Note provides links through to Practice Notes and Precedents which provide more detailed information on each topic.

A useful guide to a general bilateral finance transaction can be found in the Loan transaction toolkit. For specific information on the key points to consider when entering into a real estate finance transaction, see: Real estate finance—checklist.

Types of REF transactions

Lending against the cash flow generated by a property is the most common form of real estate finance. In its simplest form, it involves a loan to a borrower which is repaid from the rental income of the borrower’s property. For more information, see Practice Note: Introduction to real estate finance—the lending structure.

Property investment or property development?

Real estate finance transactions are either investment finance transactions or development finance transactions, depending on whether the property is being purchased as an investment or whether the property is being purchased to be developed. For more information, see Practice Notes:

  1. Real estate finance—investment facilities—key features, and

  2. Real estate finance—development facilities—key features

In a real estate finance transaction, the main asset of value is the property owned by the

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